Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

March started with a nice bounce in emerging-market stocks, giving hope to investors the worst may be over. The one thing lacking, though, is volume, which may suggest there isn't enough conviction that equities from Brazil to China have really hit rock bottom.

Trend Reversal?
The MSCI Asia Pacific ex Japan index has bounced since touching a four-year low but volume remains thin
Source: Blooomberg

The MSCI Emerging Markets index is up 4.2 percent this month, erasing almost two-thirds of losses from the previous two months. The MSCI Asia Pacific ex Japan index has risen 4.9 percent, after falling 8.9 percent in January and February. Yet overall volume has been below the one-year average, as well as the 30-day moving average most of the time.

Technical analysts tend to look at volume for an indication a trend is reversing. If there are lots of people buying when stocks start bouncing following a bear market, it usually signals investors have begun to think equities are a bargain. There hasn't been that clear a correlation between volume and direction this year:

Lacking Conviction
Volume has been higher than the 30-day moving average more often on down days this year
Source: Bloomberg

The movement in the MSCI Asia Pacific ex Japan benchmark is of particular concern. That's because stocks from Asia comprise 71 percent of the world's most watched emerging-markets gauge:

Skewed East
What happens in Asia matters to the MSCI Emerging Markets index because the region's stocks make up 71% of it
Source: Bloomberg;
* Chart includes only 14 biggest components

Sure, some of the biggest fund managers such as BlackRock, Franklin Templeton and Goldman Sachs Asset Management have started to say developing-nation stocks are looking cheap. But given the subdued volumes, it's unclear how much of their money they're using to back those words. 

Part of the reason why emerging-market equities began to rise was the perception of increased stability in the yuan, as well as a bounce in oil prices. The MSCI Emerging Markets index has seen some of its highest correlations with crude in recent history over the past 12 months and that's still the case. Those two factors, though, are highly volatile and could quickly reverse. 

If they do, moves to the downside could easily be as intense. With anemic volumes, every little trade makes a bigger-than-usual impact on prices. Until there are decent volumes in either direction, it may be worth taking this rally with a pinch of salt.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Christopher Langner in Singapore at

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Katrina Nicholas at