(Bloomberg Gadfly) -- Travel bans and Mexican walls can't dull the love investors have for emerging markets. Perhaps even more surprising -- they're ignoring political turmoil in other developing nations, too.
Money managers plowed more than $1.5 billion into exchange-traded funds that purchase emerging-market stocks and bonds last week, the most since August. The MSCI Emerging Markets Index has rallied 5.6 percent this year, on course for its best January since 2012.
Interestingly, assets in three of the four countries leading the rally have a tumultuous backdrop of their own. Brazilian stocks included in the gauge are up 11 percent, even as one in every three citizens there favors military intervention after a corruption probe that's engulfed both acting President Michel Temer and his impeached predecessor, Dilma Rousseff.
Next best: Poland, which is up 8.7 percent. That's despite Prime Minister Beata Szydlo's Law & Justice party prompting a nationwide outcry over its stance on abortion. The government now says it may sidestep lawmaker immunity to prosecute opposition leaders who participated in the protests.
The fourth-best performance comes from South Korea, whose stocks included in the benchmark have risen 8.5 percent. President Park Geun-hye is suspended from office amid impeachment proceedings stemming from a corruption probe. The investigations have embroiled Samsung Electronics Co., which has the biggest weighting in both the Kospi local stock gauge and the MSCI Emerging Markets Index.
MSCI Emerging Markets Index gain, YTD
5.6%
Peru, with just three shares represented, is the third-best performer. Here, the story is more about what industries investors see as winning in 2017. Two of the stocks -- Southern Copper Corp. and Cia de Minas Buenaventura SAA -- are mining companies. In fact, when the MSCI Emerging Markets Index is broken down by sector, materials, which includes mining and commodities firms, and information technology are the two stand outs. Poland's KGHM Polska Miedz SA is up 36 percent in U.S. dollar terms while Brazilian iron-ore giant Vale SA's gains are similar.
Those returns also help to better explain the country breakdown: Commodity stocks led the charge in Brazil, Poland and Peru, while tech firms spurred positive advances in South Korea.
It's a salient lesson at a time most investors have their eyes glued to headlines about Donald Trump. Focus on fundamentals and try to ignore the noise.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.
To contact the author of this story: Christopher Langner in Singapore at clangner@bloomberg.net.
To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net.
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