EM equity funds shed $5 bln in past week; 12-mth outflow $100 bln -banks

LONDON, March 21 Fri Mar 21, 2014 4:23am EDT

Related Topics

LONDON, March 21 (Reuters) - Investors have pulled almost $5 billion from emerging market funds in the past week, data from EPFR Global showed on Friday, with one bank estimating that equity outflows have totalled $100 billion over the past year.

Dedicated emerging equity funds suffered outflows of $4.09 billion in the week to March 19, according to the data, which is released to clients late on Thursday. It marked the 21st straight week of losses, banks said.

The outflows are set to rival 2008, with dedicated emerging equity funds losing almost $100 billion in the last 12 months, or almost a tenth of their assets under management (AUM) according to Morgan Stanley.

During the post-Lehman financial crisis, emerging equity funds lost 15 percent of their AUM, the bank said.

At the country level, Chinese equity funds shed $2 billion, the biggest weekly outflow since January 2008 as investors grew concerned about data showing clear signs of economic slowdown and also increased currency volatility.

The data was recorded before the United States moved on Thursday to slap Russia with more punitive sanctions. That suggests outflows are likely to pick up further in coming week.

"Investors still seem worried about the knock-on from (the) China slowdown to other economies and markets in the region. Flows out of (emerging European) equity funds were light, but the high level of political risk from Russia's involvement in Crimea may lead to further pressure for investor outflows from the Russian equity market," analysts at Barclays said in a note.

Emerging debt funds, which in the previous week had seen their first net inflows in six months, returned to losses, seeing $830 million of outflows. They have shed almost $12 billion so far this year.

The stark divergence between emerging and developed market fund flows continued in the past week, with developed equity funds absorbing $12.94 billion for the current week. U.S. Funds reported inflows of $10.55 billion, banks said. (Reporting by Sujata Rao; Editing by John Stonestreet)

FILED UNDER: