In the emerging market space 2013 has turned out to be a very tough year. The iShares FTSE China Index Fund ETF (FXI – 32.07) is down 18.5% this year and is indicative of the tough time the iShares Emerging Markets Index ETF (EEM – 37.37) has had losing 14.7% on the year. Despite the consistently bad performance for emerging markets this year, the respective volatility indexes seem to have only taken notice in the past few weeks as the drop in EEM accelerated.
The Brazilian Stock Market as measured by the iShares MSCI Brazil Capped Index ETF (EWZ – 41.47) dropped another 5% last week to place the ETF down over 24%. This continued drop based on both economic and social unrest in Brazil propped VXEWZ to over 35.00 this week and keeps the curve of VXEWZ prices firmly in backwardation.