– This is the script of CNBC's news report for China's CCTV on March 7, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
EM markets were in the spotlight last week. Brazil's stocks led world gains and the real rallied as traders bet that a change in government may be closer than ever after months of political gridlock that has prevented lawmakers from focusing on kick-starting the stalled economy and closing a crippling budget gap.
Meanwhile, Brazil's currency market got a boost as welll, strengthening by 6.5% for the past week.
The rally was triggered by news that former President Luiz Inacio Lula da Silva was detained for three hours after heavily armed police raided his home in a sweeping corruption probe, fueling speculation that support will grow to impeach his successor, President Dilma Rousseff.
While the scenario in Brazil still has a great deal of uncertainty, the probability of Rousseff leaving presidency has risen to 70 percent from 50 percent, according to Bianca Taylor, a sovereign analyst and strategist at Loomis Sayles & Co. in Boston.
Lula's detention happened a week after a poll showed Rousseff's approval rating recovered from record lows as Brazilians reduced support for her impeachment, a process that could take months and involve several votes in Congress. That's why some market watchers warned the rally could be short-lived as the process to impeach the president drags on, potentially plunging Brazil deeper into chaos.
On the other hand, The Greek stock market is an outperformer as well.
Up over 25% since the recent low on Feb 11. However, the index still sees a 34% on-year plunge and 12% drop YTD. Investors are eyeing how long this rally can last.
Besides, currency markets of Indonisia, South Africa and Turkey also performed well, while the Indian bourse recorded a best weekly gain since the end of the 2011.
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.
CNBC's Qian Chen, reporting from Singapore.