Emerging-market fund flows stall in December after November bounce

Portfolio flows into emerging-market assets ground to a halt in December after healthy inflows in November, Deutsche Bank found, as concern over taking on exposure to riskier assets returned towards the end of the year.

Emerging markets have had a torrid year, with a strong dollar, rising U.S. Treasury yields, escalating Sino-U.S. trade tensions and a crisis in Turkey and Argentina battering developing-market assets around the globe.

After emerging-market stocks tumbled nearly 9 percent in October and currencies fell, November saw healthy inflows of foreign money into emerging economies as the region's currencies stabilized and investors took advantage of comparably lower valuations. "Following strong inflows into the local assets throughout November, inflows came to a halt over the past two weeks," Christian Wietoska at Deutsche Bank wrote in a note to clients.

"While we still saw net inflows into local equities, the contrary was the case for local bonds," said Wietoska, whose report analyses data from two flow trackers - the Institute of International Finance (IIF) and EPFR Global. Wietowska added that over the past eight months, emerging markets had suffered outflows on 23 of the past 34 weeks, with the peak of outflows in May and June. However, outflows were nowhere near those in 2013 and late 2016 after the U.S. election, he added.

 

(With inputs from agencies.)