Demand for non-US assets revives flows into emerging markets: Macquarie

Emerging markets (excluding China) saw $13 billion in foreign inflows in May — the highest since December 2023 — according to Macquarie. This surge, following months of outflows, was driven by renewed investor appetite for non-US assets. India ($2.3 billion), Taiwan ($7.6 billion), and Brazil ($2 billion) led the inflows.

 

Macquarie strategists Viktor Shvets and Kyle Liu noted that “American exceptionalism is eroding gradually, not collapsing,” which is fostering a slow rise in US risk premia and avoiding disorderly asset repricing. Investors are narrowing spreads between US and non-US assets, benefiting the Eurozone, Japan, and emerging markets with strong secular drivers like technology — particularly India, Korea, and Taiwan. 

 

The report highlights that spreads between US and non-US assets are tightening — especially in India and Indonesia — where rising US rates haven’t triggered higher local interest rates or foreign exchange volatility. “This gives central banks and fiscal authorities room to cut rates or raise spending without excessive volatility. In a world where no one is exceptional, EMs are no longer penalized,” the note concludes.

  Back in favour: The flows were driven by rising demand for non-US assets 

	Net flow ($ mn)
	May	YTD
India	2,324	-9,942
Indonesia	337	-2,726
South Korea	887	-11,377
Taiwan	7,567	-10,892
Thailand	-151	-1,755
Brazil	2,046	3,917
South Africa	-305	-5,222
EM Asia ex China	11,050	-39,530
EM ex China	13,325	-40,758

  Source: Bloomberg; Macquarie Global Strategy