Friday, April 17, 2009

The Debts of the Spenders: Emerging Market Flows Pick Up

Is the stock market rally real? Regardless of fundamentals, the effect of ZIRP has pushed a lot of risk taking into emerging markets on both the equity and bond side from mid-March to mid-April. The emerging market bond spread is from Markit's CDX.EM index. Apparently not even recent turmoil in Thailand and Russia have put a dent in bond traders' confidence levels.

Here is a good summary of both the equities and bond side:

NEW YORK (Dow Jones)--Inflows of $1.7 billion into emerging-market equity funds posted a sixth straight week of net inflows on the week to April 15, with all regions receiving fresh money as risk appetite rebounded, fund tracker EPFR said Friday.

EMEA equity funds took in a net $28 million, their best showing since the third week of June 2008. Latin America-dedicated funds received $385 million, while emerging Asia fund took in $738 million. Geographically diversified Global Emerging Markets funds took in $619 million.
For the year, emerging market equity funds have received inflows of $7.3 billion, while developed market equity funds have had outflows of $56.1 billion.

As for bonds, emerging-markets bond funds enjoyed their best week since early August as risk premiums have shrunk, EPFR said.

Emerging-market bond fund took in $137 million on the week, with hard-currency funds took in $123 million, and local-currency funds had $15 million in outflows. Blended funds had inflows of $28 million.

-By Claudia Assis, Dow Jones Newswires


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