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Investors went on January emerging market buying spree, report shows

In January, investors significantly increased their investments in emerging market (EM) assets, driven by expectations of a Federal Reserve interest rate cut, according to a report by the Institute of International Finance (IIF). The report highlighted that non-residents purchased a net $31.4 billion in EM portfolio investments, marking the highest January inflow since 2018. This surge was particularly notable in debt securities, with $26.6 billion invested, while equity investments saw a more modest increase of $4.8 billion. The inflows were widespread, with significant investments in countries like China, India, and Brazil, although some regions like Russia and Turkey experienced outflows. The optimism was fueled by a dovish stance from the Fed, leading to a drop in U.S. Treasury yields and a weaker dollar, conditions that typically favor EM investments. However, the IIF cautioned that the sustainability of these inflows could be tested by upcoming U.S. economic data and potential shifts in Fed policy.

Read the Full Reuters Article at:
[ https://www.reuters.com/markets/investors-went-january-emerging-market-buying-spree-report-shows-2025-02-18/ ]