The decoupling theory is back in vogue. Emerging markets equity prices are at an all-time high compared with developed markets. The FTSE All-World All-Emerging index is up 66% since its lows at the end of October. The Shanghai Composite index has risen 45% this year in local-currency terms.
Money continues to flow into emerging markets funds. Since the beginning of the year emerging markets equities funds have seen net inflows of $22.3 billion, according to EPFR Global, a data provider, as investors gravitate again towards riskier assets in their search for yield.
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