After leading the rally among developed markets in 2013, Japanese stocks and related exchange traded funds are some of the worst this year, with the Nikkei leading declines on a 14% drop.

The iShares MSCI Japan ETF (NYSEArca: EWJ) , which tracks the MSCI Japan Index, has declined 8.6% year-to-date and is now trading below its 200-day exponential moving average.

The Japanese market is undergoing a correction as emerging market growth slows and the Federal Reserves goes ahead with stimulus cuts, Bloomberg reports.

“Japan’s market finally came to its senses,” Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co, said in the Bloomberg article. “Investors ignored risk too much toward the end of last year and the market was out of balance.”

According to Reuters, Japan is the most expensive stock market in Asia based on price-to-earnings multiples.

Additionally, the yen currency attracted safe-haven interest on volatility in the emerging markets, moving to about 101.56 U.S. dollars as of Tuesday. The stronger yen is seen as a liability that will hurt Japanese exporters. The CurrencyShares Japanese Yen Trust (NYSEArca: FXY) is up 4.3% year-to-date.

“The stronger yen is probably the main driver,” of the bigger declines in Japanese stocks, Gary Dugan, chief investment officer for Asia and the Middle East at Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, said in the article. “Investors are locking in profits as they back away from equities.”

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