Emerging Markets & Outflows

Source: BWI

In a sign that emerging market assets may be on the brink of bouncing back, Emerging Portfolio Fund Research (EPFR) says that outflows from emerging market equity funds have started slowing down. Here’s a blow-by-blow account of the outflows: for the week to 17 May, flows into the combined Emerging Market Equity Funds slowed to just $43 million for the week after averaging weekly net contributions of $1.6 billion this year.

Year to date flows into these funds amounted to almost $33 billion. For the week to 29 May, emerging market funds lost $5 billion due to investor outflows. For the week to 7 June, outflows were $1.48 billion. Outflows continued steadily thereafter, with redemp-tions being $1.99 billion in the week to 21 June.

It is the latest data that is heartening — during the week to 28 June, redemptions from the emerging market equity funds tracked by EPFR were down to $500 million. Almost $15 billion have been lost in outflows since the bloodbath began in May.
Yet another sign of returning normalcy is provided by the commodities markets, where the slide began. Recent bounces in both metals and gold seem to indicate returning optimism. However, as pointed out earlier, on a global basis, the stance is still weighted towards monetary tightening.

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