Emerging markets in Asia (with the exception of China) are witnessing a remarkable improvement in performance during the current month, supported by the decline in the strength of the dollar and the reduction of global trade tensions.
The recent data showed a rise in regional stock indicators, as well as positive cash flows after several weeks of decline.
Stock indicators record strong gains
The MSCI Emerging Markets Index (with the exception of China) increased by 1.8% during the past week, which reflects the improvement of investor confidence, as the index trades at 15 times for future profits estimates, making it attractive to investors looking for valuable opportunities.
South Korea leads gains
In South Korea, the Cosby index jumped by 5.5% since the beginning of the month, exceeding the S&P 500 gains of 1.3%, and this strong performance is supported by the tech and the increase in the demand for semiconductors.
It also strengthened the attention of foreign investors from the performance of Korean stocks, amid positive expectations for the growth of the Korean economy this year.
Return of cash flows
Emerging markets recorded positive cash flows, as investors poured more than $ 700 million in Asian stocks during the past five days, this positive transformation represents the end of seven consecutive weeks of output flows, which reflects the increasing investor confidence with the dollar’s weakness and improve their view of emerging markets.
Poor dollar
The US dollar witnessed a remarkable decrease, as the Bloomberg index of the dollar fell by more than 3% from its highest levels in early February, and this decline increased the attractiveness of assets in emerging markets, as many of its economies depend on the supplies of the dollar.
The weakness of the dollar also granted central banks in emerging markets more flexibility to alleviate its monetary policies to support economic growth.
Investor confidence improved
The morale of investors improved after they realized that the customs threats announced by US President Donald Trump were often more negotiating tactics than real threats, and this perception led to reducing concerns about commercial wars, which strengthened confidence in Asian emerging markets.
Technology leads growth
The technology sector had a prominent role in supporting markets, as new developments in artificial intelligence have strengthened the demand for the shares of technology companies, especially in South Korea and Taiwan, and the launch of the new artificial intelligence from the Chinese company “Deepseek”, increased optimism in the sector, which helped In pushing technical stocks forward.
Future expectations
As for future expectations, it is likely that the emerging markets will continue their good performance if the dollar continues to be twice and capital flows continue, improve the commercial environment and the stability of monetary policies will enhance the momentum of growth, but there are some potential risks, such as the return of the dollar to rise or a sudden escalation in American customs policies , Which may affect this recovery.
