Citi: Clients turn cautious on emerging markets after two weeks of inflows

FILE PHOTO: A man walks past a Citibank branch in lower Manhattan, New York October 16, 2012. REUTERS/Carlo Allegri

LONDON (Reuters) - Investment bank Citi said on Monday that its clients had turned cautious on emerging market assets over the last week, with both real money and leveraged investors pulling out funds following four weeks of inflows.

“Real money and leveraged investor flows turned negative across EM last week, suggesting trimming of EM exposure amidst decline in the EUR and risk assets in general,” Citi’s Dirk Willer wrote in a note to clients, referring to the week ending Friday March 8.

There was some divergence across regions, with real money outflows dominating investors’ movements last week. Indonesia’s rupiah, Hong Kong dollar, Malaysian ringgit and Philippine peso suffered the heftiest flows, Citi found analyzing its clients’ money flows.

“Anxiety over US-China deal and weakness of risk assets may have triggered trimming of exposure,” Willer wrote.

Data showed that investors pulled out of Latin America with Chilean and Colombian peso at the fore front, while low yielders such as Polish zloty and the Czech crown attracted flows.

Reporting by Karin Strohecker; Editing by Tom Arnold