Emerging market equity fund outflows this year surpass whole of 2013

Updated: Friday February 7, 2014 MYT 5:57:39 PM

Emerging market equity fund outflows this year surpass whole of 2013

LONDON: Outflows from emerging market equity funds since the start of this year now exceed those for all of 2013 after investors continued to flee emerging stock and bond funds during the past week, banks said on Friday, citing EPFR Global data.

The Boston-based fund tracker, which releases data late on Thursday to clients, said $6.37 billion had fled emerging equity funds in the week to Feb. 5, while bond funds shed $1.98 billion.

That brings year-to-date equity outflows to $18.6 billion versus a $15.2 billion outflow for the whole of 2013, the data shows. Emerging equity funds have now suffered 15 straight weeks of outflows, a record that beats the previous 14-week losing streak seen in 2002, analysts at Morgan Stanley said.

Morgan Stanley also noted that the $6.4 billion equity outflow comes after similar losses last week and the cumulative two-week outflows are the biggest since January 2008.

The exodus of foreign investors will alarm governments, many of which rely heavily on this portfolio capital to plug balance of payments deficits and finance spending.

Emerging assets have sold off heavily this year, adding to last year’s hefty falls and hurt by the prospect of less money-printing by the U.S. Federal Reserve and the growth slowdown in China and other big developing economies.

Emerging debt funds have fared relatively better, suffering $6.6 billion in outflows after losing $14 billion last year. Bonds in local emerging market currencies accounted for most of the losses, banks said.

Analysts predict that outflows will continue.

“The pace of exit has accelerated and given the continued mixed EM cyclical data and the trend-following nature of retail flows, will likely persist,” Barclays analysts said in a note.

“The outflows are not good news and from a macro perspective will have negative consequences by weighing on currencies, credit extension and ultimately the ability to consume.” – Reuters


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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