Foreign appetite for EM assets continues to grow

Despite ongoing geopolitical tensions and the prospect of a shift in Fed policy, emerging market equities are on track to outperform developed market equities for the second quarter in a row. Their healthy performance is reflected in renewed demand from international investors. In July, there were net inflows into global ETF and mutual funds that invest in EM assets for the fourth month running according to EPFR Global. What’s more, net inflows were larger than in any of the prior three months. Data from stock exchanges in six countries in Emerging Asia suggest demand for equities in the region from overseas investors has been quite strong overall so far in August, although not as strong as last month.