Wall Street had a spectacular May, with the S&P 500 gaining about 4.9%, the Dow Jones adding about 2.1% and the Nasdaq-100 surging about 10% over the past month (as of May 28, 2026) on U.S.-Iran truce hopes (read: 5 ETF Areas Trading at a 52-Week High).
But emerging markets did not fall behind. iShares MSCI Emerging Markets ETF EEM jumped about 10% over the past one month (as of May 28, 2026). The fund has gained about 22% so far this year. Let’s find out why.
Middle East Crisis
The ongoing Middle East conflict between the United States and Iran likely prompted investors to focus on other investing areas. Moreover, signs of a ceasefire in May provided a further boost to overall risk-on sentiment.
Improving sentiment was underpinned by strong demand for artificial intelligence (AI) and easing volatility, helping global equities regain momentum and establish a firmer footing.
AI Boom
Note that the EEM ETF allocates about 13% of its portfolio to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). The stock skyrocketed more than 200% over the past month on AI strength. The fund’s second-largest holding, Samsung Electronics (which accounts for about 6% of the portfolio), saw its shares soar more than 40% over the past month (as of May 28, 2026).
SK hynix — the fund’s third-largest holding — witnessed its shares rise about 80% over the past month. In fact, South Korea’s tech rally was driven by gains in Samsung Electronics and SK hynix, as investors rotated back into AI-linked semiconductor stocks.
The rally pushed SK hynix above a $1 trillion market valuation, making it the second South Korean company after Samsung to hit the landmark level, as per Reuters (read: Bullish on AI? South Korea ETFs Deserve a Spot in Portfolios).
Flat Greenback
Invesco DB US Dollar Index Bullish Fund UUP delivered a flat return over the past month (as of May 28, 2026) on ceasefire hopes. A weaker greenback is generally positive for emerging markets. This is because many emerging economies borrow in dollars and rely heavily on foreign capital flows. Moreover, most emerging markets are rich in commodities.
Since most commodities are priced in U.S. dollars, a weaker greenback scenario tends to push commodity prices higher, benefiting commodity-exporting emerging economies.
Cheaper Valuation
Several emerging markets ETFs have a cheaper valuation than the S&P 500. The key U.S.-based equity gauge trades at a price-earnings multiple of 26.47X (as of May 22, 2026) (per WSJ).
Against this backdrop, below we highlight a few emerging markets ETFs that have a lower P/E than the S&P 500.
WisdomTree Emerging Markets High Dividend ETF (DEM)
P/E (36 Months): 11.20X
One-Month performance: Up 6.7% (as of May 28, 2026)
Yield: 3.78% annually
WisdomTree Emerging Markets Quality Dividend Growth ETF DGRE
P/E (36 Months): 19.09X
One-Month performance: Up 8.4% (as of May 28, 2026)
Yield: 1.21% annually
Nomura Focused Emerging Markets Equity ETF EMEQ
P/E (36 Months): 19.09X
One-Month performance: Up 8.4% (as of May 28, 2026)
Yield: 1.21% annually
iShares MSCI Emerging Markets Asia ETF EEMA
P/E (36 Months): 18.71X
One-Month performance: Up 9.8% (as of May 28, 2026)
Yield: 1.18% annually
Goldman Sachs ActiveBeta Emerging Markets Equity ETF GEM
P/E (36 Months): 16.32X
One-Month performance: Up 9.8% (as of May 28, 2026)
Yield: 1.84% annually
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Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
WisdomTree Emerging Markets High Dividend ETF (DEM): ETF Research Reports
Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM): ETF Research Reports
WisdomTree Emerging Markets Quality Dividend Growth ETF (DGRE): ETF Research Reports
iShares MSCI Emerging Markets Asia ETF (EEMA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).