Investors pull out USD 6 bn from emerging market funds: EPFR

Written by Press Trust of India | New Delhi | Updated: Sep 11 2013, 02:57am hrs
New DelhiReuters.
Investors have pulled out nearly USD 6 billion from bonds and equity funds focused on emerging markets in a week amid concerns over the US Federal Reserve's plan of curtailing its stimulus drive starting later this year as well as tensions in Syria, says a report.

According to funds tracking company EPFR Global, nearly USD 6 billion has flown out of emerging markets bonds and equities funds during the week ending September 4.

Explaining the outflow, the report said, "There are fears that the US economy may face higher taxes, oil prices and interest rates in the fourth quarter of 2013 as the Federal Reserve takes the first step to wind down its quantitative easing programme."

The US becoming more involved in Syrias civil war and lawmakers wrestling with spending limits and debt ceilings kept the pressure on US Equity Funds and most emerging markets fund groups in early September, it added.

The US Federal Reserve's decision to curtail its liquidity measures with a goal of ending it in mid-2014 has been weighing on emerging market funds.

The EPFR did not disclose India-specific fund outflow data but said both India and Indonesia equity funds recorded net inflows during the seven day period.

According to information available with the Securities and Exchange Board of India (Sebi), foreign institutional investors (FIIs) withdrew USD 809 million from the Indian market (bonds and equities) during the week under review.

Most of emerging market focused equity funds invest in India as FIIs and the capital flows through this route are a key factor in the stock market trends here.

At the country-wise level, investors pulled over USD 9 billion out of US equity funds during the week ending September 4.

Globally, redemptions from equity funds totalled USD 11.4 billion during this period while bond funds posted net outflows of USD 284 million.