I plotted LZEMX vs OIH, for want of a handy reference for oil. There *is* a strong degree of correlation between the two, but it isn't perfect. In particular, when oil reaches an extreme, like the highs during the 1st half of 2008, LZEMX didn't really follow along. Also, LZEMX seemed to bottom sooner, while oil still had some declining to do.

Given the great amount of industrialization that emerging markets want to do, it makes sense that they could perhaps be thought of as "commodity" countries; both users and strong consumers. Oil is the king of commodities, and reflects in some sense net economic activity. Unless it goes through the roof, at which point it becomes a harbinger for imminent slow-down.

A second strong source of correlation is foreign currencies. Oil is denominated in US dollars, and when the dollar weakens, the price of oil in dollars goes up. But so do equity holdings of companies in other countries/currencies. So it is possible that movements in the strength of the dollar are driving the perceived price action in *both* oil and LZEMX, and they are not directly playing off of each other.

I suspect it is a bit of both: there is a link between oil and LZEMX, but they also just happen to share links to a third player, namely the US $.