The shadow of the trade war reappears, emerging market ETFs see a nine-week streak of gains interrupted, with India experiencing an outflow of nearly $300 million in a single week, ranking first

Concerns over tariff impacts have reignited in the market, leading investors to withdraw from emerging markets, ending a previous trend of nine consecutive weeks of net inflows totaling $15.9 billion. On Monday, it was reported that for the week ending August 1, emerging market ETFs listed in the U.S. experienced a total net outflow of $1.11 billion, a stark contrast to the previous week's net inflow of $2.36 billion. Of the $1.11 billion total outflow, equity ETFs saw a fund outflow of $890 million, while bond funds were also not spared, with a net outflow of $222 million. As a result of the capital outflow, emerging market asset prices came under pressure. The MSCI Emerging Markets Index fell 2.5% last week, reaching its lowest level since June 30, 2025, and the total asset size of related ETFs shrank from $414.7 billion to $402.9 billion. (The MSCI Emerging Markets Index fell 2.5% last week) India Market Hit Hardest, Tariff Threat Triggers Mass Withdrawal India has become the epicenter of this round of capital outflow, with a net outflow of $298.2 million last week, the highest among all emerging markets. Among them, the iShares MSCI India ETF, with a size of nearly $10 billion, recorded a fund outflow of $21 million, marking the first weekly net decrease since April of this year. The direct reason for the capital withdrawal is the trade actions taken by the Trump administration against India. According to CCTV News, Trump stated that starting August 1, a 25% tariff would be imposed on goods imported from India, higher than the 15% to 20% range imposed on several other Asian countries. Reports indicate that Trump also criticized India's status as a member of the "BRICS" and described it as "anti-American," even labeling India and Russia as "dead economies." Analysts from Deutsche Bank and Barclays predict that due to weak foreign capital inflows and the resistance posed by U.S. tariffs, the Indian rupee is expected to continue being one of the worst-performing currencies in Asia in the second half of this year and may fall to a new historical low by the end of the year. Amid the overall pessimistic market sentiment, a few markets still show resilience. Data shows that Vietnam became the country with the highest capital inflow last week, with a net inflow of $3.27 million, primarily driven by the VanEck Vietnam ETF. Investor Sentiment Turns Cautious, Trade Uncertainty Intensifies The rising risks in emerging markets are forcing investors to reassess their investment strategies TMX VettaFi Research Director Todd Rosenbluth stated: Investor concerns about the potential for the U.S. to impose higher tariffs on India and other emerging markets have led to fund redemptions. The risks associated with exposure to emerging markets have increased, making it difficult for many to bear. UBS's Ulrike Hoffmann-Burchardi also pointed out that the fragility of trade agreements is a significant risk facing the market. She stated: The trade agreements reached so far have a 'handshake' nature, which means that tensions may resurface during detailed negotiations. The imposition of punitive tariffs on a range of countries, including Switzerland, last Friday indicates that there will be more urgent discussions in the future