Emerging Market Equities Continue to See Outflows
Global Equities Fell on Downgrades and Lower Output
Outflows
In the week ended September 25, emerging market equities (EEM) saw total outflows of $200 million, compared to outflows of $69 million in the previous week. The region saw outflows for the eighth consecutive week.
Investors withdrew funds from emerging markets including China, Brazil, and Russia due to slowing growth and lower industrial production in the nation. China’s steep fall, Brazil’s rating being cut to junk, and falling commodities led investors to withdraw funds from these emerging markets.
Some select markets are currently priced at lower valuations, but investors are looking for signs of recovery before deploying funds.
Investments in emerging markets account for ~12% of worldwide investments in mutual funds and ETFs. Emerging economy offerings from mutual funds and ETFs are expected to rise in upcoming quarters. Reform initiatives by major countries to further open economies, remove currency restrictions, and deploy funds are helping emerging market economies attract more funds.
Emerging market ETFs
Asset managers have raised their offerings of ETFs covering emerging market equities and debt. Asset managers like BlackRock (BLK), JPMorgan Chase (JPM), State Street (STT), and Deutsche Bank AG (DB) now offer investment products in emerging markets. Net investments for ETFs linked to performing economies should rise in the future.
Major ETFs like the iShares Emerging Markets ETF (IEMG), the iShares Core MSCI Emerging Markets ETF (EEM), the WisdomTree India Earnings ETF (EPI), the iShares MSCI India ETF (INDA), and the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV) attracted a positive investment flow totaling $163 million in the week ended September 25.
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