Emerging Markets Face Risks
Emerging markets are facing increased risks as geopolitical tensions rise — the $EEM is down 1.61% to $56.21, signaling a flight to safety [https://x.com/i/status/2030962000545669604]. Gold is nearing $5,100/oz [https://x.com/i/status/2031307309675151532]. However, markets rebounded after Trump hinted at a quick end to the war [https://x.com/i/status/2030962000545669604].
The iShares MSCI Emerging Markets ETF (EEM) is facing headwinds as geopolitical tensions escalate, particularly in the Middle East. The ETF, which provides exposure to large and mid-sized companies in emerging markets, has seen its price decline, reflecting a broader flight to safety. Investors are wary of potential disruptions to trade, investment, and supply chains. Gold, often seen as a safe-haven asset, is nearing $5,100/oz, signaling increased demand amid uncertainty. On March 10, 2026, gold rose to $5,168.50 USD/t.oz, a 0.56% increase from the previous day. Historically, gold reached an all time high of $5,608.35 in January 2026. President Trump's recent hints at a quick resolution to the conflict have triggered market rebounds. He suggested the conflict with Iran could be resolved "very soon" and floated the idea of oil-sanctions relief. However, some analysts remain skeptical, noting that markets are highly sensitive to headlines from the Middle East. Geopolitical events often cause short-term market pullbacks, but historically, the S&P 500 has been higher on average one, three, six, and twelve months after such events. Still, emerging markets are particularly vulnerable to geopolitical risks, especially those with high public debt, low international reserves, and weak institutions. The conflict's impact on oil prices is a key concern. Trump has stated that oil prices above $100 per barrel are acceptable to contain Iran's influence. Rising oil prices stoke global inflationary fears and can pressure energy-importing emerging markets. Emerging market equity funds focused on countries like Pakistan, Chile, and the UAE have experienced significant declines. The MSCI's emerging markets equities index has fallen more than 6% this week, contrasting with smaller declines in the MSCI World Index and the MSCI United States. Despite near-term correction risks, Goldman Sachs maintains a forecast for 25% growth in MSCI EM earnings per share in 2026. The EEM ETF's key holdings are in Technology (32.89%), Financial Services (20.77%), and Consumer Cyclical (10.35%) sectors. The ETF has an expense ratio of 0.72% and a 30-Day yield of 1.09%. Over the past year, EEM is up more than 34%.
