“The trend has been accelerating outflows, but not to shocking levels. This week’s redemptions are the biggest, in over two years, actually getting on for three years, and overall sentiment towards emerging markets ex China is not particularly strong,” he said.
Dedicated India funds have faced redemptions of nearly $1 billion since October, according to a report by Elara Capital stated. Retail flows from Japan to India also turned negative in November for the first time since January 2018, according to an earlier Elara report.
The redemptions come after nearly $24 billion in inflows into these funds during the last financial year, based on EPFR data compiled by Kotak Institutional Equities
While investors increasingly turn to the US, Brandt sees the spotlight in emerging markets shifting back to China.
Investors are seeking more affordable markets and are exploring the idea that the gradual stimulus measures introduced by Chinese policymakers will eventually gain traction and drive a recovery in the Chinese market.
“Though there’s a narrative that Indian equities have gotten expensive, and a certain degree of correction is welcome, it is more to do with the investing universe focus being on the two heavyweights at the moment, the US and China.”
Also Read | Samir Arora’s advice for stock picking in 2025
The overall sentiment towards EMs excluding China, remains relatively weak. Global emerging market funds, often seen as a key indicator of broader investor interest in the asset class, have been underperforming.
The EMEA (Europe, Middle East, and Africa) region, he noted, is currently the only bright spot within the EMs, with investors cautiously positioning themselves amid hopes for stability in key markets.
Also Read | Equirus Capital’s take on IPOs in 2025 and the sectors to watch
Any enthusiasm for EMs outside of China is now focused on the EMEA region.
For more details, watch the accompanying video
Catch all the latest updates from the stock market here
