Has the US dollar peaked? Capital flowing back to emerging markets

With the pause in the rise of the US dollar and the easing of Trump's early tariff policies, investors are beginning to pay attention to Asian emerging markets stocks again. According to Bloomberg, in the five trading days leading up to last Friday, global investors bought over $700 million of stocks in Asian developing countries (excluding China), bringing investors a 1.8% return, reducing the decline over the past six months to about 12%. Analysts believe that this rebound is mainly due to the easing of concerns about the Trump administration's tariffs. Maitri Asset Management stated: "As the 'Trump tariffs' have been slower and smaller than expected, market sentiment is expected to improve, stimulating the rebound. Reduced trade barriers, along with a weaker US dollar and interest rate cuts, have created a more favorable environment for global economic growth." Investors are increasingly considering Trump's tariff threats as primarily a negotiating strategy. For example, according to CCTV News, Trump announced in early February his intention to impose a 25% tariff on imports from Canada and Mexico, but later agreed to some tariff exemptions. Furthermore, there are signs that the long-term strength of the US dollar may be nearing an end. Bloomberg's US Dollar Index has fallen by over 3% since its peak in early February, and asset managers have reduced their bullish bets on the US dollar for four consecutive weeks, although overall positions still lean towards long. Maitri Asset Management stated: "Even if tensions over tariffs are not completely eliminated, reducing trade frictions may create a more stable environment for businesses and investors in emerging markets. Moderate easing of tariffs could ease trade tensions and benefit Asian economies highly dependent on exports." Analysts believe that a weaker US dollar will help emerging market currencies rise and give central banks more room to cut interest rates to support economic growth. In addition to the US dollar and tariffs, Asian stock markets have also received a boost from DeepSeek in China - this application has improved the prospects of multiple industries including automakers and e-commerce companies. However, analysts also warn that Trump could very well continue to implement his tariff threats, which could lead to another significant increase in the US dollar. This article was reprinted from "Wall Street News" by author: Jiang Zihan; GMTEight edited by: Chen Xiaoyi.