The markets still winning amid the 2026 selloff

While some market crises seem to be limited to a single country or region, others are happy to rope everyone in. In the past month, it’s become increasingly clear that the war in Iran is a crisis that’s not leaving anyone out. Jumps in energy prices caused by the effective blockade of the Strait of Hormuz have investors scrambling to determine what this will mean for interest rates, consumer spending, inflation and growth prospects.  

This has thrown a spanner in the works for most global markets. The MSCI World is down 2.3% as of 30 March in sterling terms, and the S&P 500 has dropped 5.4% on the same basis. Nowhere has proved to be immune to this energy squeeze, but some markets have suffered less severely than the MSCI World and S&P 500. Even before the conflict in Iran, both indices were looking relatively flat since the beginning of the year, meaning that once losses started coming in, it took very little time to wipe out the meagre gains.  

Other markets had started the year rocketing upwards. For these areas, even though the energy pinch has hurt, their gains from earlier in the year, or a softer impact from the energy crisis has meant they are still ahead overall in 2026.

Here, we highlight how three markets, the UK, Korea and Latin America, , have weathered this storm successfully so far. These aren’t the only areas that have seen success but do represent three very different cases. While the UK market is only sitting on a modest positive return for the year and is some way below its record pre-war levels, it’s success early in the year has been able to carry it forward while offering investors access to a (somewhat) stable and developed market. Meanwhile, Korea and Latin America, which both typically sit in the emerging markets category, have surged ahead with returns that could be attracting quite a lot of envy from investors. Here’s what’s going on in these regions, and why their picture looks so different.  

Investing at home

Through March, the UK’s flagship index, the FTSE 100, clung on to the positive return it built earlier in the year, if just barely. The index ended March with a total return for the year to date of 3.4%, after dipping as low as 0.4% just a week before. These figures are still changing rapidly as expectations of when the war in Iran will end shift nearly day to day.  

The UK’s positive return was largely powered by an extremely strong start to the year, as the FTSE hit all-time highs. On the day before the conflict began, 27 February, the FTSE was up over 10% on the year. But the UK does hold a large amount of sensitivity to oil prices. The IEA reports that 36% of energy in the UK comes from oil, and another 38% comes from natural gas. Plus, the UK has net energy imports of 47.6% as of the IEAs most recent report, which has been steadily increasing over time. This means a high reliance on outside sources, increasing the sensitivity to the war in Iran.  

However, many of the companies making up the FTSE 100 are longstanding members which have survived market turbulence in the past, which may give investors some comfort. And as AI bubble fears still weigh on investor’s minds, an index with low exposure to the technology sector could continue to be appealing.

The FTSE's large weighting towards financials means that it can be cyclical, but a slightly higher interest rate environment can be helpful for banks, if rises stay in the zone of slightly higher lending rates instead of an economic downturn which sees a lack of people and businesses taking out loans and/or loan defaults. Oil companies Shell and BP have also powered the index along as energy prices have increased and miners and defence companies have also been strong performers.

Korea's tech push

Korea’s market performed so well in the beginning of 2026 that, despite drops of over 20% from this year’s peak, it remains well in the black. As of 30 March, iShares MSCI Korea UCITs ETF, a fund tracking the MSCI Korea index, has returned 25.2% this year.

The journey hasn’t been for the faint-hearted. The Korean market’s gains hit nearly 60% in the days leading up to February 28, when war began in Iran, and quickly dropped into the 20% return range. Over the past month, returns have jumped by 10% multiple times within the span of a week and fallen just as quickly.  

Korea is far from immune to the energy crisis. It relies on oil for about 37% of its energy needs, according to the IEA, and imports 94% of its energy. As of 2024, over 70% of its crude oil imports came from the Middle East. On the 31 March, South Korea announced it was considering a $17.1 billion package to ease the rising costs for energy and industry.

For now, the strong prospects of the companies there seem to outweigh the energy worries for investors, at least in comparison to other markets. However, those investing in the market, at least through an exposure through the MSCI Korea Index, need to be aware of what exactly they are investing in. Korea’s market is largely dominated by two companies, Samsung and memory chip producer SK Hynix, at 22.5% and 19.4% weightings, respectfully. Both companies sit within the information technology sector, meaning they are likely to be sensitive to the same market factors. The third-highest weighting in the index is just 2.7%, with Hyundai Motor.  

This concentration can mean periods of extreme success, like we’ve seen so far this year, but it comes with a high level of risk. Investors in the index are putting a large amount of faith into the two companies. Both have done extremely well in recent years, but sit in positions that can be easily affected by energy prices thanks to the links to data centres, not to mention other market factors such as concern about an AI bubble.  

Latin America's energy advantage

Investors have previously steered clear of Latin America primarily due to its reputation for political uncertainty. However, in 2025, each election held across Latin America ended with a centrist or conservative leader in charge, which markets have responded positively to. Many of these leaders also have a close relationship with the US. At the same time, the assets available in Latin America, namely commodities and precious metals, have boosted investors’ willingness to put money in the region.  

Latin America has also been grazed more lightly by the shortage of energy than other regions, with a much more manageable reliance on oil. South America has the second-largest reserves of oil after the Middle East.  

Interestingly, much of the energy that Brazilians use comes from biofuels and other sustainable energy. Between 2015 and 2025, clean energy investment increased by 25% in Latin America, and fossil fuel investment decreased by over 20%, according to the IEA.

The investment is paying dividends now, as Brazil saw its gasoline prices rise by just 5% in March, according to AP News, while the US experienced a 30% increase.  

Latin America has not just had gains earlier in the year that have made up for recent losses, they’ve been able to show genuine resilience to the crunch of energy supply. Unfortunately, for those that only access Latin America through a global index, this hasn’t made much of a difference to returns. The FTSE All World, for example, has its largest exposure to a Latin American country through Brazil. This accounts for just 0.51% of the index. Mexico follows behind at 0.26%, but these are easily dwarfed by the 59.8% exposure to the US.  

But funds that track MSCI EM Latin America fund have a much more diverse set of holdings than seen in the Korea index, largely since it has a continent to invest across instead of a single country. The largest holding in the iShares MSCI EM Latin America UCITS ETF is a fund tracking the Brazil index, at an 8% weighting, followed by mining company Vale at 5.8%. The index has a 38% exposure to financials, followed by materials at 18.4%, offering a slightly different composition to investors.  

It’s not uncommon, especially in emerging markets, for a region to have a strong performance over a few months. But interestingly, Latin America has beaten the MSCI World, Korea, and the FTSE 100 over the past five years. The market comes with geopolitical and currency risks but does also seem to be offering something different for investors.