Something that appears to be a new theme for emerging market volatility this year is that it seems to be reacting more to what is going on in the US markets than the underlying EEM. EEM lost only 0.50% last week and was never really under the same sort of pressure that was seen in the S&P 500. Despite the activity in EEM, VXEEM ran up over 15% on the week. In isolation this does not make too much sense, but there have been several weeks where VXEEM mirrors VIX more than the expectation of relative performance to the underlying market.
The Brazilian stock market had a tough week as EWZ dropped over 3%. However, here’s another disconnect, VXEWZ was down just under 13%. So EEM had a better week than EWZ, but VXEEM rallied more than VXEWZ. Maybe traders think other emerging markets will be under performing relative to Brazil over the near term.