Investors who were wary of pullbacks in the emerging markets can capitalize on the decline with inverse or bearish ETF plays. For instance, the ProShares Short MSCI Emerging Markets (NYSEArca: EUM) takes the inverse or -100% daily performance of the MSCI Emerging Markets Index, the benchmark to EEM. The ProShares UltraShort MSCI Emerging Markets (NYSEArca: EEV) follows the -2x or -200% daily performance of the Emerging Market Index. Additionally, the Direxion Daily Emerging Markets Bear 3x Shares (NYSEArca: EDZ) tracks the -3x or -300% performance of the benchmark.

Additionally, Wells Fargo argued that Brazil, an area where investors have become excessively optimistic following the elections of a reform-minded leader, could also be the first to decline in a sell-off. The Brazilian real is among the best-performing currencies this year as traders anticipate President Jair Bolsonaro will pass unpopular social security reform, privatize state-owned companies and revive growth.

“Now would be a good time to hedge EMFX risk, especially for some of the currencies that are still fragile,” Brendan McKenna, a currency strategist at Wells Fargo, told Bloomberg. “Brazil is a good example. I have a longer-term bearish view on the real, and would say now would be a good time to put a hedge on as the real has strengthened a fair amount.”

Investors can also hedge against a pullback in Brazilian equities through something like the ProShares UltraShort MSCI Brazil Capped ETF (NYSEArca: BZQ), which attempts to deliver two times inverse of the daily performance of the MSCI Brazil 25/50 Index,

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