Slower growth but more stability is to be expected in emerging markets in the second half of 2011, according to Mirae Asset Global Investment.

The firm, which specialises in emerging market equities, thinks money flows to emerging markets will resume after an outflow from the region in the first half of the year for the first time since 2008. Mirae highlights waning concerns over inflation, attractive valuations and healthy growth in the region.

At the same time, Fidelity International earlier this week pointed to the increasingly inflationary environment, something also the rising price of the traditional "safe haven" asset, gold, is suggesting.

Mirae argues that the events causing a slowing global economic outlook will be positive for emerging markets in the next six months. Volatility and slow growth in the developed world and declining commodity prices are holding back inflationary pressures, which creates a backdrop to wind down monetary tightening, the firm says.

Increases in crop and crude oil supplies are predicted to help to lessen inflationary pressures in emerging markets, while the effects of monetary tightening, which largely started in the second half of 2010, begins to have an impact.  

The report from Mirae follows an analysis from Baring Asset Management earlier this week, which said that emerging market currencies and local debt offer favourable investment opportunities.

“Capital inflows to emerging markets are strong and rising, and improving fiscal and debt profiles continue to underline the credit quality of most emerging market economies,” said Thanasis Petronikolos, head of emerging market debt at Barings.

In terms of Asian equities, investors are sitting on the fence asking the difficult question: after months of rocketing growth, high levels of inflation and a credit boom, will Asian stocks have a soft or hard landing? As may be expected, Mirae thinks that China and India are in for a soft landing.

Mirae’s analysis is based on the views of in-house investors. The company is part of UK-based Mirae Asset Financial Group, and is headquartered in Seoul, South Korea.