India funds see first inflows in weeks as China recovery sparks record EM commodity and gold allocations

EM Commodity funds attracted a record $1.14 billion, their strongest inflow since 2020. The last such surge coincided with a powerful rally in Indian metals between July 2020 and March 2022, a trend that appears to be repeating since July 2025, with Indian miners once again outperforming.

India-focused funds have broken a five-week streak of redemptions, drawing $142 million in net inflows this week as global investors rotate allocations toward Emerging Markets, according to Elara Capital's Global Liquidity Tracker. The move comes amid renewed optimism around China’s recovery, which is fuelling record demand for commodities and gold.

The rebound in India was entirely ETF-driven, with $241 million of inflows, while long-only funds continued to leak $100 million. This shift highlights investors’ preference for tactical exposure rather than long-term commitments. Regional patterns on the other hand were uneven. France-domiciled India funds reached a decade-high inflow of $144 million, but redemptions continued from Japan ($30 million), the UK ($41 million), and Luxembourg ($44 million).

The broader Emerging Market story remains dominated by commodities. EM Commodity funds attracted a record $1.14 billion, their strongest inflow since 2020. The last such surge coincided with a powerful rally in Indian metals between July 2020 and March 2022, a trend that appears to be repeating since July 2025, with Indian miners once again outperforming.

Gold shines, technology stabilises
Investors have piled into gold at an unprecedented pace. Gold funds saw $16 billion in inflows this week alone, capping the strongest four-month streak on record. Weekly allocations, averaging $3 billion recently, spiked nearly fivefold as prices broke above April 2025 highs.

Technology flows also showed signs of stabilisation. EM Tech funds secured $1 billion in inflows after four weeks of heavy redemptions totalling $4.3 billion, a relief for Indian IT stocks that had been under pressure since the Trump victory-driven selloff in late 2024. On the other hand, US Tech remained the sector of choice globally, with $3.2 billion in inflows, the largest in five months.

The report also noted that global equity flows remain positive overall, led by Global-mandated and China-focused funds, while US-focused flows stay flat. Incremental liquidity is being funnelled into China, Hong Kong, and Global strategies, reinforcing the pivot away from US-centric bets.

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