South Korea crashed 15.57%, China fell 7.17% in October: Are emerging-market funds getting riskier?

Emerging-market equities faced a sharp selloff in October 2026, with South Korea, Brazil, Taiwan and China recording substantial losses. The correction has raised questions about whether investors should reconsider exposure to emerging-market funds, particularly those concentrated in Asian economies.

According to Motilal Oswal Mutual Fund's Global Market Snapshot – October 2026, South Korea recorded the steepest monthly decline of 15.57%, followed by Brazil at 12.11%, Taiwan at 8.37%, China at 7.17% and South Africa at 4.14%.

The figures, based on MSCI country indices measured in US dollars, indicate broad-based weakness across emerging markets.

South Korea's sharp fall masks strong annual gains

Despite October's correction, South Korea remained among the strongest performers over the preceding year, delivering a return of 70.95%.

Taiwan also recorded a substantial one-year gain of 54.83%, despite falling 8.37% in October.

China presented a different picture. Its index declined 7.17% during October and remained down 22.82% over one year, highlighting persistent weakness.

Brazil fell 12.11% in October but retained a positive annual return of 5.31%.

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KOSPI crashes 8.6%, triggers circuit breaker

The selloff intensified on Friday as South Korea's benchmark KOSPI plunged more than 8% in early trading, triggering a circuit breaker and temporarily halting stock and derivatives trading.

The Korea Exchange activated the 20-minute trading halt at 9:03 a.m. The index subsequently traded around 4,923.47, down approximately 500 points, or 8.6%, slipping below the 5,000 mark.

Technology stocks led the decline, with Samsung Electronics tumbling 10% and SK Hynix losing 13%. Hyundai Motor declined 6.9%, while LG Energy Solution and Kia fell 4% each.

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The rout followed a sharp selloff in US technology stocks amid uncertainty over artificial intelligence and data-centre policies following Democratic gains in the US midterm elections.

"It is time for correction, but we feel that there may be some overreaction to the outcome of the midterm election," said Jun Kwang-woo, chairman of Seoul-based Institute for Global Economics.

Jun, a former chairman of South Korea's National Pension Service, also cautioned that AI infrastructure expansion could slow amid concerns surrounding data-centre development.

How did developed markets perform?

Developed markets showed mixed performance in October. Switzerland gained 8.32%, followed by the United Kingdom at 2.25%, while Japan declined 4.18%.

In the US, the Nasdaq 100 dropped 6.65%, the S&P 500 declined 0.93%, and the Dow Jones gained 1.70%.

The figures indicate that technology-led weakness extended beyond emerging economies.

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Should investors reduce emerging-market exposure?

Emerging-market funds offer access to high-growth economies but carry currency, geopolitical and concentration risks.

For Indian investors, country-specific funds can experience sharper fluctuations than geographically diversified portfolios.

October's correction highlights why investors should examine a fund's country and sector exposure rather than relying solely on its emerging-market classification.

Developed-market funds can provide diversification, although they remain vulnerable to global corrections.

The bottom line: South Korea's 15.57% October decline, despite a 70.95% annual gain, illustrates the volatility of emerging-market investing. Investors should review geographic concentration and investment horizons before making allocation changes.

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