iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM) fell Tuesday as Samsung sells off and the US dollar continues with strength. Emerging markets fell 2.7 percent, close to its worst day since September 9th when it fell 3.4 percent. EEM has been a strong performer this year while adding 15 percent as investors leaned towards riskier assets.
EEM dropped as Samsung, its second largest holding fell 8 percent today following news that they will halt all production of the Galaxy Note 7 regarding reports that the smartphone has been catching fire.
The dollar has been backed by heightened odds of a U.S. Federal Reserve rate hike in December impacting emerging markets. A stronger dollar may hurt emerging markets. When the dollar is strong, any dollar denominated debt held by companies or countries becomes harder to repay. A stronger dollar may pressure emerging markets to weaken their currencies to boost exports which would make the debt issue worse. A stronger dollar would result in the decline of commodity exports.