Emerging Equity Resiliency Defies Steep Sell-Off in U.S. Stocks

(Bloomberg) -- When U.S. stocks catch a cold, emerging markets tend to get the flu.

That didn’t happen Tuesday, when American stocks slumped by 3.2 percent and an emerging-markets exchange-traded fund fell by 2.1 percent.

Among the half dozen reasons cited for the rout in U.S. stocks was concern that the trade truce between China and America won’t lead to any meaningful deal. The relative in resilience in emerging markets undermined that argument.

The iShares Emerging Markets ETF (ticker EEM) has a significant weighting toward China-linked companies, which presumably would suffer if trade concerns are paramount. EEM hasn’t fallen at least 2 percent while beating the S&P 500 ETF by 1 percentage point on the same session in nearly a decade.

The last time? Feb. 23, 2009, at the tail end of the bear market that encompassed the financial crisis.

To contact the reporter on this story: Luke Kawa in New York at lkawa@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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