The iShares MSCI South Korea ETF (EWY) is still the best performing country ETF in the world year-to-date, up 36.6% through March 12, 2026. The iShares MSCI Brazil ETF (EWZ) ranks third globally with an 18.4% gain. On the surface, this looks like a clean story of two emerging market winners running in parallel.

The Iran war is changing that calculus.

Since fighting began on February 28, the leaderboard of 2026 market performance is being rewritten in real time — not by earnings revisions, not by central bank policy, but by a single structural variable: energy trade balance as a percentage of GDP. On that measure, South Korea and Brazil sit on opposite sides of the ledger, and the gap between them is widening with every day the conflict extends.

EWY vs EWZ: Key Fact

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EWY vs EWZ: Performance Comparison Since the Iran Wa

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The year-to-date numbers still favor South Korea by a wide margin. The iShares MSCI South Korea ETF (EWY) has delivered a 36.6% gain from January 1 through March 12, powered by the AI semiconductor boom that drove the KOSPI above 6,000 for the first time in February 2026.

But zoom into the period since February 27 — the day before the Iran war began — and the picture reverses sharply.

Since the start of the conflict, EWY has lost 12.9%. The iShares MSCI Brazil ETF (EWZ), by contrast, is essentially flat over the same period, down approximately 1.0%. That 12-percentage-point divergence in less than two weeks reflects the energy trade balance divide playing out across global country ETFs — a pattern tracked in real time on the Iran War Market Monitor.

South Korea ETF (EWY): Energy Import Vulnerabilit

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South Korea imports approximately 93% of its energy needs. The country has no meaningful domestic oil production and is structurally dependent on Middle Eastern crude — the precise supply corridor now under threat from Iranian attacks on Hormuz shipping. TradingEconomics data confirms that South Korea's current account surplus fell in January as import costs rose, a trend that accelerates sharply at oil above $85 per barrel.

The country's energy trade balance as a percentage of GDP is deeply negative, making it one of the most exposed economies in Asia to a sustained supply disruption of this kind. The Iran War Market Monitor captures this structural exposure directly, showing Korea as one of the most negatively affected large markets since February 27.

The composition of EWY's portfolio reinforces this vulnerability. The fund's top two holdings are Samsung Electronics (005930.KS) at 21.5% of the portfolio and SK Hynix (000660.KS) at 18.7%. Together they represent over 40% of the entire fund. Both are large-scale semiconductor manufacturers operating energy-intensive fabrication facilities. Chip fabrication is among the most energy-consuming industrial processes in existence — fabs run 24 hours a day, require ultra-precise environmental controls, and consume enormous quantities of electricity and process gases.

Below the top two holdings, EWY carries significant exposure to Hyundai Motor (005380.KS) at 2.7% — a major energy consumer in manufacturing — and Korea Electric Power (034020.KS) at 1.8%, directly exposed to rising fuel input costs for power generation. The fund's industrial and financial holdings are similarly subject to margin compression as energy costs rise across the Korean economy.

When oil sustains above $100 per barrel, Korean manufacturers face simultaneous pressure: higher electricity costs, higher raw material transport costs, and a weakening won that makes the import bill larger in domestic currency terms. TradingEconomics reported on March 12 that the South Korean won has been sliding on oil concerns, with South Korea stocks explicitly retreating on energy price pressure.

Brazil ETF (EWZ): Why It Is Better Equipped for the Crisi

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Brazil sits on the opposite side of the energy trade balance equation. The country is on track to become one of the world's top four crude oil producers, driven by massive pre-salt deepwater discoveries. OilPrice.com reported that "Brazil's oil production keeps growing," and Petrobras — the state-controlled oil major — reported that its profits nearly tripled in 2025 on record output.

The iShares MSCI Brazil ETF (EWZ) holds two Petrobras share classes in its top ten holdings: PETR4.SA at 6.9% and PETR3.SA at 6.2%, giving a combined Petrobras weight of approximately 13.1%. That makes Petrobras the largest single company exposure in EWZ by combined weight, and it is a direct and highly leveraged beneficiary of sustained high oil prices.

Reuters reported on March 6 that Petrobras's CFO stated a "boost in cash flow might allow for extra dividends this year if surging oil prices boost cash flow." Seeking Alpha upgraded Petrobras to Buy, describing it as "an asymmetric bet" given the Iran conflict, citing the combination of "extreme valuation" and "potential upside from higher oil prices." That upside flows directly through to EWZ holders.

Beyond Petrobras, EWZ's largest holding is Vale (VALE3.SA) at 10.4% — the world's largest iron ore producer and a major diversified miner. Vale benefits from the same commodity-price tailwind that supports Petrobras, with iron ore and base metals also subject to supply chain disruption risk from the crisis. The third largest position is Nubank (NU) at 9.4%, Brazil's fintech giant, which provides domestic consumption exposure largely insulated from the energy shock.

Brazil ETF (EWZ): The Agricultural Tailwind EWY Doesn't Hav

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The Iran war's impact on Brazil extends beyond oil. A second commodity channel is opening that could prove equally significant for EWZ's earnings outlook.

CNBC reported on March 12 that "a global food price shock looms as Middle East war rages on," noting that disruption to the Strait of Hormuz threatens to ripple far beyond energy markets into agricultural supply chains. DW reported that the conflict is "driving up energy and fertilizer costs, raising alarms over a return of food inflation." OFI Magazine noted that the conflict "threatens disruptions in global agricultural commodity markets."

Brazil is the world's largest exporter of soybeans, beef, sugar, coffee and orange juice, and the second-largest exporter of corn. It is one of the few economies globally whose agricultural trade surplus is large enough to generate a meaningful additional tailwind when commodity prices rise broadly. If the oil shock transmits into a wider commodity price surge — which historical precedent suggests is likely — Brazil's role as the world's agricultural superpower becomes an additional earnings uplift for EWZ holdings.

That means the earnings outlook for Brazilian companies held within EWZ could improve on two fronts simultaneously: higher oil revenues through Petrobras, and higher agricultural commodity revenues through Brazil's agri-industrial complex. Current earnings estimates for EWZ may be conservative in a scenario where the crisis extends further.

EWY vs EWZ: Valuation Compariso

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On a forward earnings basis, the two ETFs trade at comparable discounts to global equities — both among the cheapest major emerging market funds in the world.

At first glance, the two funds look nearly identical on valuation. Both trade at roughly a 45% discount to the MSCI ACWI on a forward earnings basis — among the deepest discounts available in global equity markets.

The Iran war, however, introduces a material divergence in how those earnings estimates should be interpreted going forward.

For EWY, the risk is that current consensus earnings for Samsung, SK Hynix and Korea's broader industrial base do not yet fully reflect the compounding impact of higher energy input costs, a weaker won and tighter domestic monetary conditions. If oil remains above $100, Korean corporate earnings could face downward revisions — making the current forward P/E less attractive than the headline number implies.

For EWZ, the dynamic runs in the opposite direction. Petrobras's earnings rise mechanically with oil prices. Vale's commodity revenues benefit from the broader commodity cycle. Agricultural exporters see improved terms of trade if food prices follow energy prices higher. That means current earnings estimates for EWZ holdings may be conservative, with upside revisions plausible if the oil shock persists.

Two funds with nearly identical headline valuations — but with structurally diverging earnings trajectories under the current macro regime.

Use the CountryETFTracker Valuation Tool to compare real-time forward P/E ratios and premium/discount metrics across all tracked country ETFs.

EWY vs EWZ: Top Holdings Side by Sid

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EWY — iShares MSCI South Korea ET

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EWZ — iShares MSCI Brazil ET

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The structural difference is visible at the holdings level. EWY's dominant positions are energy consumers — their input costs rise as oil rises. EWZ's largest exposures are either energy producers (Petrobras ~13.1% combined) or commodity exporters (Vale) whose revenues benefit from the same commodity cycle that is pressuring energy importers.

EWY vs EWZ: Key Differences Summar

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FA

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Why is EWY still ahead of EWZ year-to-date if Brazil ETF is better positioned for an oil shock?

EWY built a commanding YTD lead before the war began, driven by AI semiconductor demand and the KOSPI's historic break above 6,000. The war started February 28 and is progressively eroding that advantage — EWY has lost 12.9% since February 27 while EWZ is essentially flat over the same period. The gap is closing.

Why does Petrobras matter so much for the Brazil ETF (EWZ)?

The two Petrobras share classes (PETR4 and PETR3) combine for approximately 13.1% of EWZ's portfolio, making Petrobras the largest single corporate exposure in the fund. It is a direct, highly leveraged beneficiary of higher oil prices — its CFO confirmed in March 2026 that surging oil prices could support extra dividends as cash flow improves.

Could Brazil's agricultural exports add to EWZ's upside beyond oil?

Yes. Brazil is the world's largest exporter of soybeans, beef, sugar and coffee. If the Iran war triggers a broader commodity price cycle — through higher fertilizer costs, shipping disruptions and food inflation — Brazil's agricultural exporters would see improved terms of trade, potentially driving upward earnings revisions across EWZ holdings beyond Petrobras alone.

Are EWY and EWZ still cheap after their YTD rallies?

Both trade at approximately 10.3–10.5x forward earnings — a roughly 45% discount to global equities. The critical distinction is earnings trajectory: EWZ's estimates carry upside risk in a sustained oil shock, while EWY's carry downside risk from energy input cost pressure on its semiconductor and industrial base.

Where can the real-time divergence between South Korea ETF and Brazil ETF be tracked?

Use the CountryETFTracker Compare Tool with a February 27 start date to monitor the war-period divergence, and the Iran War Market Monitor to track the full energy trade balance framework across all country ETFs.