Exodus from emerging market stocks continues: BAML

By: | Published: August 8, 2015 10:07 AM

Investors pulled $2.8 billion out of emerging markets last week, the fourth weekly redemption in a row, and poured further funds into European stocks, Bank of America Merrill Lynch said on Friday.

Investors pulled $2.8 billion out of emerging markets last week, the fourth weekly redemption in a row, and poured further funds into European stocks, Bank of America Merrill Lynch said on Friday.

The $3.3 billion net inflow into European equity funds in the week ending Aug. 5 was the 12th straight weekly inflow, and brought the year-to-date total up to $83.5 billion.

The emerging market redemptions meant outflows have reached $17 billion in just four weeks, more than half the $29.4 billion total so far this year, BAML said in its report, which also cited the latest flow figures from data-provider EPFR Global.

Investor sentiment towards emerging markets has been sour all year but has deteriorated significantly in recent weeks thanks to steep losses in Chinese stocks, a renewed dive in commodity prices and the looming prospect of higher U.S. interest rates.

Emerging market stocks’ outperformance relative to U.S. stocks is now at its lowest in a decade, BAML said.

More than half of the emerging market equity fund outflows this year, some $16.5 billion, have come out of China, BAML said.

Brent crude oil futures have fallen by about 30 percent in the last three months to below $50 per barrel for the first time since January.

Investors also continued to turn their back on U.S. equities, pulling out a net $4.3 billion from U.S. equity funds. This year, $113.3 billion has fled U.S. equity funds, BAML said.

Japanese equity funds pulled in $2.6 billion last week, their 22nd inflow in the past 24 weeks.

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