Emerging equity funds see best inflow since Feb -banks cite EPFR data

LONDON, Sept 13 Fri Sep 13, 2013 7:37am EDT

LONDON, Sept 13 (Reuters) - Inflows to emerging equity funds rebounded in the past week, rising to the highest since February, banks said on Friday, citing data from EPFR Global, while bond funds suffered their 16th week of losses.

Data from the Boston-based fund tracker, released to clients late on Thursday, showed that in the week to September 11 equity funds had taken in a net $2.6 billion inflows, after an average $1 billion weekly loss in the past 10 weeks.

Year-to-date, outflows from the sector now total $13.5 billion, the banks said.

The gains coincide with inflows of $11.3 billion to developed equity funds, which snapped a three-week losing streak. Analysts said the gains reflect economic recovery, not only in the West and Japan, but also in many developing countries which have posted relatively robust economic data.

Much of the impact of a reining in of U.S. Federal Reserve stimulus - ending a flood of cheap funds that has boosted many emerging markets - also looks to have been priced in after a $4.4 billion loss last week, the biggest in 10 weeks.

"In line with the first signs of a pick up in global growth, strong inflows returned to EM equity funds," RBS analysts told clients. "If the trend in growth data continues to improve from here, we think that the worst may be over in terms of outflows from emerging equities."

Emerging stocks are up more than 3 percent this week, their biggest weekly gain since mid-July.

The exodus from emerging debt continued however, with bond funds seeing outflows of $1.2 billion in the past week, banks said. But it was the lowest level of net redemptions since mid-August.

The majority of the outflows, $685 million, were from local currency debt funds.

Analysts said local debt outflows had exceeded hard currency ones for five of the last six weeks, attributing this to the risks of holding assets in weakening emerging currencies.