Demand for EM bonds revives on expectations of new signals of policy easing by central banks - BCS
MOSCOW. June 14 (Interfax) - Demand for emerging market bonds picked up in the week ending June 12 on expectations of new signals of policy easing by the central banks, BCS chief strategist Vyacheslav Smolyaninov said in a report.
The same cannot be said of equities, however.
Net capital outflow from Russia's stock and bond markets through funds, including all funds that invest in Russian equities and bonds, totaled about $160 million in the week June 6-12, compared to outflow of $250 million in the previous week, EPFR Global data show.
"Global investors put $0.6 billion of new money into EM bonds in expectations that central banks would ease their policies. Equities are still of little interest though - outflow from GEM funds was $1.1 billion. The Federal Reserve's meeting next week will help us to assess the prospects for the EM rally to continue. We are skeptical," Smolyaninov wrote.
Net outflow from Russian equities through funds, including all funds that invest in Russian stocks, totaled $200 million in the week, compared to an outflow of $230 million in the previous week. Funds that invest only in Russian equities saw outflows of $140 million, the second highest figure this year, down from $150 million the previous week.
"Russia-focused funds showed outflows, the second worst weekly result of 2019, linked solely to outflows from ETF funds, while active funds received a new $3 million. GEM equity funds also had poor results (minus $1.1 billion). Outflows prevailed in most categories of country and regional funds, however funds investing in China swam against the current and received $333 million in new money. Investors are not rushing to buy EM equities and look like they will continue to watch how the trade negotiations go," Smolyaninov wrote.
Inflow of capital into Russian bonds through funds, including all funds that invest in Russian bonds, amounted to roughly $40 million in the week ending June 12, up from $20 million the previous week. There was negligible net outflow from bond funds focused only on Russia.