After being unloved for much of last year, emerging markets (EMs) are regaining investors’ attention. Over the past two months, stocks across countries such as Brazil, Russia and Thailand saw an energetic rally. The benchmark MSCI Emerging Markets Index has gained 18% since its multi-year low in January. It has also outperformed developed markets, as measured by the MSCI World index, by four percentage points year to date.

Recent fund flow data shows that the resurgence of interest continues unabated and seems to be gaining momentum. For four consecutive weeks to March 23, EM equity funds and exchange-traded funds (ETFs) saw positive net inflows, according to a strategy note issued by Jefferies Hong Kong on March 28. Total net inflows during the four weeks amounted to US$5.8 billion ($7.8 billion). Of that inflow, some US$2.7 billion came in the last week to March 23 alone. It was the largest weekly inflow seen in eight months. By contrast, developed markets saw a net outflow of US$4 billion that week.

The recent inflows to EM equity funds are in stark contrast to last year, when investors pulled out a whopping US$57 billion as they anticipated the start of a monetary policy tightening cycle in the US. In addition, slumping oil prices hit a number of oil-exporting EM countries.