The Hindu Business Line : Signs of optimism in emerging markets

This is suggested by the 13 per cent rally witnessed in the Morgan Stanley Capital International – Emerging Markets Asia index (MSCI EM Asia) since March 17.

However, Indian markets appear to show less enthusiasm in the rebound as suggested by the 6.7 per cent increase in MSCI India over the same period.

Macro economic factors such as inflation and a possible slowdown in the GDP growth appear to be concerns that have kept the local markets muted.

While the rebound in emerging markets, in general, can be partly explained by the strong rally in commodities and crude oil, Asian markets too appear to have attracted investors’ interest once again. Data from fund flow tracker EPFR indicates that inflows into Asia (ex-Japan) are once again trickling in.

Outperformers

The MSCI EM Asia consists of 9 countries including India, China, Korea, Thailand, Taiwan and the Philippines. Between March 17 and now, local indices of Korea, Taiwan and Thailand have outperformed other Asian emerging markets.

The Indian markets, however, continue to wallow in pessimism on the back of climbing inflation numbers, slowing growth in the index of industrial production and downgrade of earnings.

While the Sensex has remained flat over the period mentioned above, MSCI India index has returned 6.7 per cent, under performing a number of emerging markets.

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