Investors continue to pull out of EM equities, bonds - BCS
MOSCOW. May 31 (Interfax) - The outflow of capital from emerging market equities and bonds continued in the week from May 23 to May 29, BCS Global Markets chief strategist Vyacheslav Smolyaninov said in a report.
As a result, the net capital outflow from Russia's stock and bond markets through funds, including all funds that invest in Russian equities and bonds, totaled about $130 million in the week ending May 29, compared to an outflow of $180 million in the previous week, EPFR Global data show.
The net outflow from Russian equities through funds, including all funds that invest in Russian stocks, totaled $110 million in the week, compared to an outflow of $160 million in the previous week. After just one week when inflows totaled $10 million, funds that invest only in Russian equities again saw outflows of $90 million.
"Last week, capital outflows from funds focused on Russia resumed and totaled $87 mln: funds with withdrawn both by traditional funds and ETF. At the same time, outflows from GEM funds nearly ceased, totaling only $88 million after peak volumes of $2.8 billion two week ago, when the first news reports emerged of a resumption of the U.S.-China trade war. India ($251 million) and South Korea ($179 million) proved attractive to investors in the past week, whereas the EMEA and Latin American markets did not inspire investment in the countries of those regions," the report said.
The outflow from Russian bonds through funds, including all funds that invest in Russian bonds, amounted to roughly $20 million in the week ending May 29, matching last week's outflow. There was negligible net outflow from bond funds focused only on Russia.
"Outflows from GEM bond funds continue: outflows from this class of assets in the week totaled $613 - the fifth week of outflows from this category of funds and a record volume over the past three weeks. Russian bonds have thus far stayed clear of this negative trend on developing market, which could in the end become a time bomb, which will put an end to the current euphoria on the Russian bond market," the expert said.
Smolyaninov recommends defensive positioning both in Russian equities and bonds.
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