After such a turbulent week in global markets, it is no surprise that investors again withdrew a sizeable amount from emerging market (EM) funds. And this week, after fifteen straight weeks of positive flows, Russia funds also reported net redemptions, albeit modest. Funds focused on Turkey were amongst the very few to attract new money last week. But the redemption from Russia funds should be short-lived. Based on current trends, we can expect to see good inflows for this current week. (see below)
Knee-jerk reaction to events in Japan. For the week ended Wednesday, EPFR datashows that investors withdrew approximately $2.2 bln from all EM funds. That came against a small net inflow of $17 mln the previous week but is consistent with the large weekly redemptions seen in the six weeks before that. Investors have now taken over $25 bln from all EM funds since the exodus started in the last week of January. Last year’s total inflow was close to $90 bln. Asian markets were unsurprisingly the hardest hit with a total loss of $971 mln while EM Balanced funds lost $435 mln and BRIC themed funds reported outflows of $334 mln.
Turkish delight. Amongst the major country specific funds, Russia fared relatively well compared to China, India and Brazil but could not extend the previous run of fifteen straight weeks of positive flows. Last week Russia dedicated funds reported redemptions of $58 mln while India funds lost $183 mln, China funds reported outflows of $172 mln and Brazil funds lost $121 mln. Turkey dedicated funds were amongst the few winners with a net inflow of $46 mln. Turkey funds have been negative for six of the last seven weeks and last week’s net inflow was the largest since the last week of October.
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