Asia EM Equity Strategy: Flows & Positioning Guide

Research evidence excerpt

Asia EM Equity Strategy: Flows & Positioning Guide

Foundation

July 2, 2026 07:07 AM GMT

Morgan Stanley Asia (Singapore) Pte.+MAsia EM Equity Strategy | Asia Pacific Kristal Ji

Equity Strategist

Flows & Positioning Guide Kristal.Ji@morganstanley.comDaniel K Blake +65 6834-6949

Daniel.Blake@morganstanley.com +65 6834-6597

Passive long-only inflows to EM equities resumed in June after a Jonathan F Garner

pause in May, while active investors remained net sellers. Hedge EquityJonathan.Garner@morganstanley.comStrategist +65 6834-8172

fund positioning continues to be concentrated in IT as of June Morgan Stanley Asia Limited+

end. In May, the combined weight of Korea and Taiwan in GEM Chloe Liu

portfolios rose to 50.4%. Chloe.Liu1@morganstanley.com +852 2848-5497

Emerging market flows from ETF/mutual funds in June (EPFR, as of June 24,

2026) – passive foreign long-only inflows into EM equities resumed, while active

foreign funds remained net sellers: Passive foreign funds recorded US$6.1bn

inflows into EM equities during the month, while active long-only foreign funds sold

a net US$5.3bn ( Exhibit 22 ). China continued to see active foreign outflows of US

$1.5bn, alongside sizable selling from passive domestic funds totaling US$20.6bn

(see Exhibit 25 for a breakdown).

Asia was broadly net sold by foreign investors in June (based on stock exchange

data): Foreign investors sold US$27.9bn Korean equities, US$18.4bn Taiwan equities,

US$3.1bn Indian equities and US$1.0bn Indonesian equities. On the other hand, retail

investors and domestic institutional investors in Korea net bought a combined US

$27.5bn of equities during the month. See more details and charts in EM Market

Flows .

Hedge funds' positioning in Japan and China/HK came down, while Taiwan was