According to a Goldman Sachs strategy piece, foreign investors remained massive net buyers of emerging Asia last week. Their net purchases amounted to $1.8 billion, compared to $914 million for the week before and $102 million for the week before that. Clearly all those CIOs who came to the CLSA investor conference went back to the US with a new view of Asia.

New money helps. US-based equity funds surveyed by AMG Data Services reported net inflows totalling $3.59 billion for the week ended October 8. Inflows into Asia-Pacific ex-Japan funds were the biggest in the past 130 weeks (that is, since April 11, 2001).

In terms of the flows into emerging Asia last week, the biggest gainer was Korea, which saw inflows of $816 million followed by Taiwan ($597 million). Thailand saw net buying of $104 million worth of stocks, the first positive week for Bangkok in the last seven.

India has seen consecutive net inflows for the past 26 weeks and last week the inflow was $217 million. Indonesia also had a positive inflow of $54 million.

Year-to-date, Korea has received net inflows of some $7.9 billion while Taiwan has had $12 billion.

It is becoming evident that Asia is now facing a situation which is the diametrical opposite of that it faced in the Asian crisis of 1997. Strengthening currencies (versus the dollar) are widely expected and as Merrill Lynch notes in its New Orient Express October 1 strategy piece: "Earnings expectations continue to strengthen for the majority of sectors in the Asia-Pacific."

Strengthening currencies and strengthening earnings signal conditions that make Asia look like a no-brainer for US dollar-based investors. Just as they deserted in 1998 for the opposite reasons, they are flocking back in 2003. The prospect of making big returns on an Asian equity portfolio in local currency terms and then getting a further boost for currency gains against the dollar is an enticing one.

The recent inflows of money into Asian equities confirm that the story is well underway. There will, of course, be bouts of profit-taking and some corrections along the way - SARS might come back, for example. But the trend itself looks clear.