Capital inflow into Russian stocks from funds focused on Russia sets record for year - BCS
MOSCOW. July 12 (Interfax) - Russia stood apart from other EM markets between July 4 and 10 thanks to significant inflows of capital through funds that invest in Russia (managed by JPMorgan, Pictet, and DWS). Global investors continue to prefer EM bonds, though there is little interest in EM stocks, BCS chief strategist Vyacheslav Smolyaninov wrote in a report.
Total capital inflow into Russia's stock and bond markets through funds, including all funds that invest in Russian equities and bonds, rose to about $130 million from $30 million the previous week, according to EPFR Global data.
Inflow of capital into Russian equities through funds, including all funds that invest in Russian equities, came to roughly $90 million, compared with an outflow of $40 million the previous week. Funds that invest only in Russian shares saw their highest result in the last year, with an inflow of $100 million, compared with an outflow of $10 million the week before.
"Equity funds focused on Russia saw their most impressive result in more than a year in terms of weekly inflows, since the beginning of July 2018, since the week preceding the Russia-U.S. summit in Helsinki. Note that inflows were not concentrated but equally distributed among several major funds, including those managed by JPMorgan, Pictet, and DWS, which saw weekly inflows of more than $20 million apiece, while investors withdrew $20 million from Parvest, the biggest fund investing in Russia. The strong data may reflect the growth of allocations for Russia in H2 2019, but it's too early to judge. Meanwhile, if we draw analogies with last year (the peak of the local market before the summit amid an inflow from foreign investors), the picture isn't so rosy. Nonetheless, Russian stocks got a significant vote of confidence, strengthening the positive dynamics of inflows, as ETF flows over the past couple of weeks show. GEM equity funds lost another $408 million over the week, and Russia saw its strongest result in terms of weekly inflows among major EM markets - a rare occurrence in the last five years," Smolyaninov wrote.
Inflow of capital into Russian bonds through funds, including all funds that invest in Russian bonds, came to roughly $40 million in the week ending July 10, down from $70 million the previous week. There was an outflow of about $10 million from bond funds focused on Russia.