EMFX: Go with the flow

Imran Ahmad at RBS

The past few weeks have seen a healthy return of flows into emerging markets (EM), which is likely to support EMFX appreciation in 2012. This bid to get back into EM is underpinned by enduring faith in the EM story, that is, better growth dynamics, demographics and carry, cleaner balance sheets, and remarkably better policy clarity/direction now than for their developed market peers. Explanations for the strong start to the year are various, but the key drivers of this confidence in EM are:

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