Asian stocks posted their worst weekly performance in nearly two months as rising inflation within the region increased the risks of aggressive policy action and hurt growth in the world's engines such as China and India.
Investors have been reluctant to add positions in emerging market stocks and bonds so far this year after record inflows in 2010 due to concerns that policy inertia may put growth-focused authorities behind the curve in fighting price pressures.
Foreigners have rotated funds out of high inflation risk economies such as Indonesia and into developed markets such as Japan this year and inflows into emerging market local currency bond funds, a favorite last year, have slowed considerably.
