Bloomberg News

Global Funds Post Fifth Week of Outflows, Citigroup Says

December 09, 2011

(Adds analyst comment in third paragraph.)

Dec. 9 (Bloomberg) -- Investors withdrew $1.2 billion from global funds in the week to Dec. 7, the fifth consecutive week of net sales, while money flowed into emerging-market funds for the first time in four weeks, Citigroup Inc. said, citing data from fund researcher EPFR Global.

The MSCI World Index of developed-nation equities fell 1.1 percent during the week after Standard & Poor’s said it was placing the 15 euro nations on review for possible credit-rating downgrades, and before European leaders began a summit to tackle two years of debt-driven turmoil. The MSCI Emerging-Markets Index gained 3.3 percent in the five days through Dec. 7.

“Investors remained cautious to slightly negative throughout the week on the possible outcome of the EU summit,” Yue Hin Pong, one of the Citigroup analysts cited in today’s report, wrote in an e-mail.

Euro-area leaders meeting in Brussels may agree to provide 150 billion euros ($201 billion) in loans through the International Monetary Fund to shore up European finances, a European Union diplomat said. Germany hasn’t taken a public stance on the proposal. Chancellor Angela Merkel has insisted that the rest of Europe first bow to tighter rules on budget deficits in order to reassure central bankers about the euro region’s longer-term economic health.

Emerging Markets

Emerging-market funds had inflows of $400 million, analysts led by Markus Rosgen wrote in the report dated today.

Developing-nation stocks will outperform those of developed countries next year as monetary policy becomes more “accommodative,” Dominic Rossi, Fidelity’s global chief investment officer for equities, said in a report e-mailed yesterday. Citigroup Inc. said in a report dated Dec. 7 developing-market shares may advance about 28 percent by the end of 2012.

The MSCI Emerging Markets Index lost 1.4 percent to 934.48 at 11:20 a.m. Singapore time. The gauge has fallen 19 percent this year, compared with an 8.5 percent decline in the MSCI World Index of developed countries.

Bond funds focused on emerging markets took in $163 million in the week ended Dec. 7, Barclays Capital said, citing data from EPFR Global. Dollar-denominated notes attracted the majority of the inflows at $134 million, while local-currency securities had $84.3 million.

--With assistance from Lilian Karunungan in Singapore. Editors: Matthew Oakley, Richard Frost

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

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


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