Huge flows into emerging-market funds in past week: Brazil’s second-biggest inflow ever; China, Taiwan, India and Russia also benefit
NEW YORK (MarketWatch) — Emerging-market equity funds saw inflows of $4 billion in the week ended May 6, the largest weekly inflow since early December and the eighth largest on record, Merrill Lynch said Friday.
Buying of exchange-traded funds was mostly responsible, but investing in funds that take long-only positions also saw strong inflows, Merrill said. Long-only funds represent one-way bets from investors ready to embrace more risk.
Both the iShares MSCI Emerging Markets Index (EEM) and the Vanguard Emerging Markets Stock ETF (VWO) have rallied impressively, up 8% over the past week. That compares with a 5% weekly gain for the S&P 500 index (SPX).
The Euro’s Demise Has Been Set in Motion: Are you protected?
"Nationalism will emerge. Healthier countries will not see fit to spend their hard earned money to bail out their less responsible neighbors."
CLICK HERE to get your Free E-Book, “Why It’s Curtains for the Euro”
Brazil, in particular, saw very large flows, garnering its second-largest weekly inflows on record, while China, Taiwan, India and Russia also saw big gains.
Merrill’s data show the pace of inflows into emerging-market funds has been strong and accelerating, totaling $14 billion over the past seven weeks.
For the year to date, the MSCI ETF is up nearly 26%, while the Vanguard ETF is up nearly 29%, far and away outpacing the 2.4% gain for the S&P 500.
Merrill Lynch said that its own emerging-markets trading indicator remains in “sell” territory but that this gauge continues to “be wrong-footed” by the big economic and financial policy stimulus being put in place in various emerging markets, as investors go increasingly for reallocation of assets into global equities.
Most Comments