Emerging market equity exchange-traded funds (ETFs) posted their largest weekly inflow since February, driven by sustained investor enthusiasm for Asian artificial intelligence (AI) stocks. Data shows that for the week ending July 31, ETFs listed in the United States that invest across multiple developing nations, as well as in specific countries, attracted roughly $4.5 billion in new capital. This marks a significant jump from the previous week's inflow of over $2 billion and represents the strongest weekly performance since February 27.

The iShares Core MSCI Emerging Markets ETF (NYSE: IEMG), which manages $152 billion in assets, drew more than $1.1 billion in fresh funds last week alone. This surge pushed its total July inflows to $1.3 billion, the highest monthly level since February. The fund is heavily weighted toward Asian technology stocks, with major holdings including Taiwan Semiconductor Manufacturing Co, Samsung Electronics, and SK Hynix. On the day the Federal Reserve held interest rates steady on July 29, the ETF saw nearly $800 million in new capital. On that same day, South Korea's Finance Minister, Choi Sang-mok, convened an emergency meeting with top financial regulators, pledging further measures to stabilize markets and restrict retail investor participation in leveraged ETFs. The benchmark KOSPI Index fell 2.2% in July, its steepest monthly decline since 2008.

The volatility of July underscores how quickly sentiment around the global AI boom can shift. The AI rally propelled the iShares MSCI South Korea ETF (NYSE: EWY), which has $25.1 billion in assets, to a record monthly inflow of over $5.6 billion in July. This ETF has become a key vehicle for investors seeking exposure to tech giants like SK Hynix, with roughly a quarter of its portfolio allocated to the South Korean memory chip maker.