Bank of America strategists say investors remain committed to emerging markets despite recent turmoil in the Middle East. The developing world was enjoying record equity inflows before the Iran war broke out, with investors building long positions across Asia, Latin America, and parts of Europe, the Middle East, and Africa.

According to BofA, record flows into equity markets across Eastern Europe, the Middle East, and Africa created a "large base" for unwinding positions if conflict persists. However, the bank's analysts including John Morris note that a quick resolution could reaffirm the optimistic view of emerging markets. The strategists emphasize that investors haven't abandoned their positive structural outlook.

Inflows into EMEA equity markets hit a record $5.57 billion through February 25, with South Africa receiving $1.58 billion and Poland $787 million. The benchmark EM stock index initially slumped 8.6% before partly rebounding. While higher energy costs and a stronger dollar pose risks, BofA suggests the ultimate impact depends on how long the conflict lasts.