EM’s are often looked down on due to their weak institutional framework and unpredictable nature. Pension funds and long-only would only chip in if they are well-covered, and many traders looking for small moves often have traumatic positions on their record- if they indeed ever dipped their toe in the unknown waters to start with that is.

To perform consistently in a volatile environment it’s crucial to get the big moves right- and since local idiosyncracies tend to drive the prevailing narratives on the back of global macro, specialization in local affairs is usually a necessity- a resource in limited supply. But from a larger perspective, EM’s are led by flows- and while liquidity was loose flows followed suit. See the Bloomberg EM liquidity index here for context:
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Chart 1: EM flows vs EM Bonds and EM Equity ETF’s