As soon as Ben Bernanke mentioned in late may that the Federal Reserve could soon begin to scale back its bond-buying programmed, hell broke loose in emerging markets.
Stock prices declined, currencies fell and interest rates on sovereign or corporate bonds shot up. For many investors, Bernanke’s comments on May 22 in testimony before the US Congress meant that the easy flows of money that had landed in emerging economies would not only end soon, but worse — would be reversed.
As a result, many financial markets in emerging economies began experiencing some “withdrawal symptoms” even before the Fed had acted.
Press forward. By September, the Fed hadn’t touched its bond-buying programme and suggested instead that it wouldn’t any time soon. Most economists and fund managers by then had figured that the famous tapering would not take place until at least December.
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Last week’s foray into positive territory didn’t last long. EM dedicated bond funds saw net outflows in the week to Wednesday according to EPFR, the Boston-based fund monitor, making 18 weeks of outflows out of 19 and reversing four weeks of what looked like improving sentiment towards EM issuers.
Flows to EM equity funds went negative, too, after three weeks of inflows. Continue reading »
It’s taken 17 weeks, but emerging market bond funds are back in positive territory at last.
Data provider EPFR, which monitors fund flows, shows that for the week ending 25 September, EM bond funds had an inflow of $570m. Continue reading »
The exodus from emerging markets continued apace with bond and equity funds tracked by EPFR suffering net outflows of $4.4bn in the week to Wednesday.
While the outflows were less than the $5.8bn recorded the week before, it’s hard to put a positive spin on what is essentially another large outflow. Continue reading »
After the worst-ever weekly outflow for emerging market bond funds, with $5.6bn draining away, fund managers have rightly been worried about what the latest figures would show.
As it happens, investors have regained some of their nerve: in the week to July 3, EM bond funds suffered a much smaller $960m of outflows, according to bankers citing data from EPFR, the research company. Continue reading »
What’s that whooshing sound? Something like five-and-a-half billion dollars draining out of emerging market bond funds, that’s what.
According to data from EPFR Global, the fund flow data provider, EM bonds just had their worst week on record. This chart says it all: Continue reading »
The US Federal Reserve signalled the coming end of QE only a month ago, but forecasters are already producing long-term forecasts of the possible impact on emerging markets of the expected cut in easy money.
That’s brave, given the amount of noise in the market. On Wednesday, the Institute of International Finance, the banker’s club, pitched in with a report predicting a drop in net private capital flows to EMs over the next 18 months to the lowest level since 2009. That sounds bad, given that 2009 was a grim year. But the IIF’s numbers are a bit less gloomy than its top line. Continue reading »
Investors seem to be taking a breather in the emerging markets sell-off. On Friday, Asian currencies were mostly stable against the dollar and equities were only marginally down, with the MSCI Asia-Pacific ex-Japan index down 0.7 per cent.
But the mood was anything but calm: there are widespread concerns that the aftershocks of the US Federal Reserve’s move on ending QE may have further to go. A lot of information has still to come out into the open – not least which investors are staring at overwhelming losses. Continue reading »
Don’t panic, says Deutsche Bank, about the emerging markets sell-off. Once the dust has settled, investors will see that most emerging markets are in better shape for a post-QE world than most developed markets because debt levels are lower.
But, as Deutsche admits, it could be a while before the dust settles. And even after it settles, EMs with big external deficits (eg Turkey) or with big recent credit growth (south east Asia) may be under pressure. Continue reading »
Blimey. Looks like investors’ exit from emerging markets assets is turning into something of a stampede.
In the week to June 5, investors pulled nearly $7bn out of EM bond and equity funds, as concerns over the future of the Federal Reserve’s massive quantitative easing programme mount. Continue reading »
Emerging markets fund managers have seen a big outflow of cash as investors have rushed to take their money out of both bonds and equities in response to the uncertainty in the US about the possible end of QE.
In the week to May 29, EM bond funds saw their first outflow in nearly a year, according to investment bank reports based on data from EPFR, the research company. EM equity funds saw their biggest outflow in over a year. Continue reading »
The latest weekly figures from EPFR, the Boston-based watcher of global fund flows, give us a snapshot of market sentiment in the days running up to Ben Bernanke’s comments on Wednesday, suggesting an end of quantitative easing could finally be in sight.
They show that investors were feeling relaxed and comfortable, even as rising yields on US Treasuries pushed up yields on emerging market debt and as EM equities remained under pressure. Will that mood last? Continue reading »
The yen is at a four-year low against the dollar, having broken through the key Y100 level. But those hoping that a falling yen would spark a rush of Japanese money back into emerging markets assets may have to wait.
The move by the Bank of Japan to unleash an unprecedented wave of aggressive monetary easing should in theory boost appetite for EM assets. Lower domestic yields and higher inflation, the argument goes, would push Japanese investors into EM.
But five weeks on, not many Japanese yen appear to have arrived on the EM shores. Continue reading »
Money flowing into Africa-dedicated equity funds in the final month of last year reached $878.4m, the biggest monthly inflow in just over two years and four times the amount in the previous month, according to data provider EPFR, write Alexandra Stevenson and Andrew Bowman. Continue reading »
The flying start to the year continues among emerging market bond investors, with flows to dedicated EM bond funds in the week to Wednesday matching the heady heights of the previous week.
And if the headline figure is high, investors’ appetite for risk is apparently higher still. Most of the money went to local-currency funds, with hard-currency funds taking a back seat. Continue reading »