Bloomberg News

Emerging Stocks Snap 11 Weeks of Outflows, Citigroup Says

October 20, 2011

(Updates with comment from analyst in fourth paragraph.)

Oct. 21 (Bloomberg) -- Emerging-market stock funds took in $665 million in the week ended Oct. 19, snapping 11 straight weeks of outflows, according to Citigroup Inc.

Diversified global developing-nation equity funds attracted $1.3 billion, Markus Rosgen, Citigroup’s Hong Kong-based chief Asian strategist, wrote in a report today. That helped offset withdrawals from regional funds, including outflows of $133 million from Asia excluding Japan, the analyst said, citing data compiled by fund researcher EPFR Global.

The MSCI Emerging Markets Index rose to a one-month high on Oct. 17 after Group of 20 officials endorsed parts of a plan to avoid a Greek default at a weekend summit. The gauge has since retreated 3.2 percent and is headed for its first weekly loss in four as divisions emerged among European leaders on how to stem the region’s debt crisis and economic growth in China slowed.

“Overall, fund buying was focused on the broad regional levels,” Rosgen wrote.

MSCI’s emerging-market index climbed 0.3 percent as of 8:06 a.m. in Singapore after two people familiar with the matter said European governments are discussing the deployment of $1.3 trillion in funds to tame the sovereign-debt crisis. German Chancellor Angela Merkel and French President Sarkozy said in a joint statement before a planned Oct. 23 summit they want euro- region leaders to agree on an “ambitious” plan.

Europe, Latin America

Funds investing in central and eastern Europe, the Middle East and Africa reported the largest weekly outflows relative to net assets, losing $266 million during the week, Citigroup said. Investors pulled $178 million from Latin American equity funds, according to the report.

The rally in emerging-market equities since early October should lead to further “solid gains” over the next 12 months, Citigroup’s New York-based analyst Geoffrey Dennis wrote in an Oct. 19 report. The brokerage said it prefers Asia to other developing regions and is “overweight” in China, South Korea, Turkey, Malaysia and Chile.

--Editors: Allen Wan, Darren Boey

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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