Emerging Markets to See Increased Foreign Fund Flows in 2026
Bank of America (BofA) predicts that emerging markets will experience a significant increase in foreign fund flows in 2026. This shift in investment is expected to occur as global funds move away from U.S. assets and towards emerging markets, supported by signs of growing resilience in developing economies.
Factors Supporting Emerging Market Assets
David Hauner, Bank of America’s Head of Global Emerging Markets Fixed Income Strategy, identified several factors that will support emerging market assets. These include a weakening dollar, the potential for central banks to cut interest rates, and the historically low-level positioning of funds. According to Hauner, "A weakening dollar, room opening up for central banks to cut interest rates, and funds’ historically low-level positioning will support emerging market assets."
Top Beneficiary Countries
The report from Bank of America highlights several countries that are expected to benefit most from foreign fund inflows. These countries include Brazil, Mexico, Colombia, Türkiye, and Poland. These nations are well-positioned to attract international capital as investors seek opportunities outside traditional developed markets.
Emerging Market Regions
The report notes that Asian local currency bonds may attract more limited investor interest due to low interest rates in the region. This disparity highlights the varying appeal of different emerging market regions as global investors reassess their portfolio allocations for 2026. As investors look to emerging markets for new opportunities, countries like Türkiye are expected to be among the primary beneficiaries of this capital shift.
Conclusion
In conclusion, the prediction from Bank of America suggests that emerging markets, particularly countries like Türkiye, Brazil, and Poland, will see a significant increase in foreign fund flows in 2026. This shift is supported by a range of factors, including a weakening dollar and the potential for central banks to cut interest rates. As global investors look to emerging markets for new opportunities, it will be important to watch how these predictions play out and which countries ultimately benefit from this trend.
