One of the most bruised asset classes in financial markets may be about to turn a corner.
Emerging markets have had a horrid few years as investors pulled funds amid the prospect of weaker growth in once-booming economies, volatility in China's markets and likely higher interest rates in the U.S. In 2015, capital outflows from emerging markets were the heftiest since the late 1980s.
Now, there are tentative signs of recovery.
Fund flows into emerging markets turned flat in February after seven straight months of outflows, according to data from the Institute of International Finance released on Monday.
"We estimate that the reversal of portfolio flows which began in July 2015 all but stopped in February, with outflows dwindling to $200 million," the global financial industry association said. Outflows of $1.1 billion from emerging market equities were offset by inflows of $900 million to emerging market debt markets, it said.
The IIF attributed February's reversal to "an unusually large" shift in market expectations away from anticipating the U.S. Federal Reserve would hike interest rates as many as four times this year to forecasts that suggested the central bank could stay on hold or even cut rates.