For a time, the thinking was that emerging market economies and exchange traded funds (ETFs) were insulated from the U.S. mess. But while they manage to resist the downward pull for a time, they’ve finally succumbed so rapidly that many are stunned.

Monday was a particularly bad day for emerging markets, when the iShares MSCI Emerging Markets (EEM) lost 7.5%. Russia seemed to bear the brunt, with the Market Vectors Russia (RSX) declining 16.8% in a single day. In just two weeks, the fund has declined 40.3%. Yesterday was the worst day for the country since the end of the Soviet Union.

But everyone is hurting: stock markets from Mexico to Indonesia, Turkey and Kazakhstan have been gripped by recession fears, reports Alexei Barrionuevo for the New York Times. The decline has taken many by surprise because, after all, the world’s fastest-growing economies thought they had managed to stay insulated from the problems of the developed world.

Latin America managed to shore up its financial sector after previous crises hit the country, but the nightmarish memories are still fresh for the region’s economies. While it’s in a better position now, fear is still depleting faith in the markets.

Short ETFs for emerging markets are on the upswing, though. The ProShares UltraShort MSCI Emerging Markets (EEV) jumped 16.2% yesterday.

It’s an unfortunate fact that while the emerging markets tend to strongly outperform in positive markets, they’re also going to get hit harder in an economic downturn. In comparing EEM (black line) to the S&P 500 (green line) for the last six months, you can see that while the fund appeared to resist the downtrend for awhile, it finally gave in and fell sharply.

Tags: Asia, China, Eastern Europe, EEM, EEV, Emerging Markets, Latin America, RSX, Russia, S&P 500

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