Emerging markets are regaining their allure as global investment funds are correcting their outlook for them. At the start of the year the story was a bit different as funds were pulling money out of these markets. Developed economies were witnessing a slow but certain growth. That seems to have stopped as funds have once again started under rating the developed economies.
A record inflow of $4 billion found its way into emerging market funds last week, Asia and China being the largest gainers of this inflow. New funds dedicated to emerging markets are hitting the streets.
At the start of the year emerging economies were looking less promising as the central banks were increasing interest rates, in a bid to fight inflation. Growth seemed to be under pressure and at the same time developed markets posted some good numbers. This surprise performance of developed markets took the sheen off the emerging ones.
This year also witnessed the so called ‘Black Swan’ events, the first being the crisis in Middle East and the earthquake, tsunami and nuclear tragedy in Japan. The Japanese calamity dented the growth outlook for emerging economies.
Inflows into global emerging market funds reached an all-time high of $3.94 billion in the week ended April 6, according to EPFR Global. Funds invested in Asia amassed $1.09 billion of that total, while those focusing on emerging Europe, Middle East and Africa attracted $631 million. Latin America, however, got only $39 million in inflows
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