Spring is not quite here yet for emerging market funds. Money flowed out of emerging market funds at a faster rate this week than last, as investors continued their move into developed market equities. Investors shifted $2.7bn out of EM equity funds in the week to Wednesday, says EPFR, the research company. Meanwhile, developed market funds saw a record $637m of inflows this week.
Still, the outflow is significantly less than in at the end of January when $7bn flowed out of global emerging market funds.
According to a report from Citi:
EM equity investors remained restless with a wall of worries, but concerns appear to have shifted to growth from inflation. Outflows for the week ended Wednesday were US$2.7bn (0.4%AUM), slightly higher than the previous week. Asia ex-Japan and Latin America saw accelerated outflows whereas CEEMA improved to receive some new money. Global International funds recovered to a positive flows trend, driven by ETF buying. This suggests that the sell-off in equities has probably moderated from the week right after the Japan earthquake, but the focus was on DM equities.
There was one bright spot: Russia. Last week’s exodus from Russia-dedicated funds proved to be temporary; this week they saw inflows of $289m.
Chris Weafer of Uralsib, the Russian bank, told beyondbrics that with uprisings in the Middle East and North Africa rumbling on and pushing up the price of oil, we could expect to see “[the] trend of investors diversifying into Russia as an energy hedge within EM, particularly focusing on energy stocks.” Brent and WTI oil prices are at nearly two and a half year highs. Brent crude for May delivery was $115.58 and Light Crude 104.92 midday Friday.
Three charts from Citi show the outflow from EM into DM equities:
No comments:
Post a Comment