What’s been driving up the MSCI EM Asia Index?

Net foreign purchases of equities are published on a daily basis in five of the eight countries in the MSCI Emerging Markets Asia Index – India, Indonesia, the Philippines, South Korea and Thailand. In aggregate, it looks as if such purchases will be larger in April than in any month since last July. It is tempting to think that this demand has been responsible for the strong performance of the index, which has risen by more than the overall MSCI Emerging Markets Index and the MSCI World Index of developed market equities since the end of Q1. But this is not the case. The strong performance has been due instead to a spectacular showing from equities in China.