“Aside from perhaps Hong Kong, Malaysia stands out as the most vulnerable to a hard landing in China and/or a fall in the renminbi, which helps explain why the ringgit has performed so poorly this week,” Martin told the FT.

Malaysia’s ringgit and Indonesia’s rupiah both dipped to 17-year lows. Since EIDO and EWM do not hedge currency risks, the ongoing depreciation in the two countries’ currencies have dragged on performances even further.

Mirae Asset Management, though, argues that South Korea and Taiwan are the most exposed to the yuan weakness as China accounts for 39% of South Korea and 29% of Taiwan’s exports.

The iShares MSCI South Korea Capped ETF (NYSEArca: EWY) has fallen 11.2% year-to-date.

For more information on the developing economies, visit our emerging markets category.

Max Chen contributed to this article

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