Global investment funds are starting to move away from the United States and back into emerging markets,
but their focus is on bonds rather than emerging market stocks. |
|---|
Emerging markets have experienced large capital outflows for about 10 years, going through a 'valley of tears,' but they are now showing a complete rebound.
As investors diversify their investment portfolios away from US assets, capital is flowing into emerging market and frontier bonds.
In particular, capital inflows into the emerging market bond market have reached a 20-year high, with emerging market governments issuing a record $214.4 billion in bonds since the beginning of the year.
* July issuance alone was about $19 billion, twice the average over the past 10 years
This is attributed to structural reforms and strengthening of domestic capital markets in emerging countries.
On the other hand, the emerging market stock market has a high proportion of technology stocks (exposed to the AI boom/bust cycle in Korea, Taiwan, etc.) and has experienced relatively large volatility, leading to significant outflows since the beginning of the year.
Hmm... I should pay attention to emerging market bonds.
▶ Source: https://www.reuters.com/business/finance/emerging-markets-march-out-valley-tears-investors-diversify-2026-08-17/
