Over $4.1Bn of investments have returned to country’s like Brazil, India and South Africa over the past 2 months. However, Arthur Budaghyan from BCA Research says the recent drive in demand is due to FOMO (Fear of Missing Out). A common market occurrence where investors are more fearful of not being involved in a rally(or sell-off) than doing the analysis which would indicate whether the investment is right for their portfolio or not. Think Bitcoin rally in 2017.
The bigger picture here is that just like bitcoin, speculative investing is often what leads to investment bubbles, which at one point will burst. It is worth mentioning that the return in Investment is primarily in assets which carry less risks such as long-dated bonds. This is important because it shows us that the risk-on sentiment we thought had returned to EM was true mainly for the least risky assets indicating that the markets are still a long way from returning to their January 2020 levels.