Recent activity in EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%) options have caught our attention as the flows have leaned mostly toward downside put buying.

The largest single country component of the MSCI Emerging Markets Index is China at 18.10%, and Chinese equities have actually had a decent rally off of their late June lows only to stall the last couple sessions.

The lagging performance in 2013 in EEM and other broad based Emerging Markets products like VWO (Vanguard Emerging Markets) which is off an additional 88 basis points year to date when compared to EEM is a function of top single country weightings, notably Brazil, taking a thumping this year.

Only Taiwan has reasonably held up thus far in a relative sense and is down much less than say China, South Korea, or Brazil, but even the Taiwanese equity market is showing some signs of weakening in the last couple sessions.

We look to EWT (iShares MSCI Taiwan, Expense Ratio 0.59%) typically as the proxy for Taiwan, an ETF that has been around since the year 2000 and that currently has $2.5 billion in assets under management, averaging a healthy 5.4 million shares traded daily.

With Taiwan representing more than 11% of the MSCI EM Index, Taiwan’s relative strength YTD when compared to other single countries is notable, especially if Emerging Markets based equities as a whole somehow turn the corner in the near term and potentially reverse the recent softness.

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