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As bilateral trade discussions progress, global capital continues flowing into EMs for 4 th week, with India, Taiwan & Brazil receiving bigger share followed by China and S.Korea. Most of these inflows are directed toward ETFs. Among domestic funds, India and Taiwan are seeing strongest inflows, while Brazil and Thailand are experiencing weaker trends.

Meanwhile, U.S. fund flows are showing signs of weakening for the first time since June’22. After significant post-COVID inflows from Oct’20 to May’22, the trend reversed post Jun ‘22, leading to a market correction. Now, similar early signs of strain are reappearing, primarily due to softening domestic fund flows—there have been outflows in six of the past seven weeks, marking the longest streak in nearly two years. Interestingly, foreign investments into the U.S. remain resilient.

India recorded an inflow of $326mn this week, following a strong $724mn the previous week—its highest since Jul’24. Notably, $257mn flowed into India-dedicated funds, marking the 4 th consecutive week of inflows, all of which remain focused on large-cap segments. U.S.-domiciled funds led with $100 mn in inflows, followed by $60mn from Luxembourg and $40 mn from Ireland. France-domiciled funds also contributed $49mn this week and $110m over past six weeks. Outflows from Japan-focused funds have stopped, but inflows have yet to resume.

In other asset classes, junk bonds saw a second consecutive week of inflows—$785mn this week following $3.6bn in the previous week. This is after five straight weeks of redemptions. Conversely, gold funds experienced 2 nd week of outflows- $734 mn this week v/s $2.6bn in the week prior.

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