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27 Mar 2015
EM outflows in currency funds continue to stay heavy – ANZ
FXStreet (Barcelona) - FX Strategists at ANZ, share the Asia-Pacific fund flow data for the week ending 25 March 2015, noting that the outflow seen in local currency funds suggests that investors remain wary of EM currency risk.
Key Quotes
“Even as EM Asia currencies gained against the USD for the week, fund outflows from the region worsened to USD2, 119mn from USD1, 517mn in the previous week driven by equities. We would have thought that a dovish FOMC statement on 18 March and the rally in Asia currencies would have promoted greater foreign buying of equities in Asia.”
“Domestic drivers appeared at play for the week, with most of the outflows driven by China equities. We think outflows in China might have been exacerbated by an 11 month low print in the HSBC China Manufacturing flash PMI.”
“India continues to be a shining star in the region, attracting inflows for the 10th consecutive week. Momentum might be waning though as it registered the lowest inflow since 21st January 2015 at USD94mn from USD412mn previously.”
“For the EM region as a whole (including Asia, Latam and EEMEA), while bond flows reversed to an inflow, outflows in local currency funds continued to stay heavy. This indicates that investors do not want exposure to EM currency risk even as EM currencies rallied against the USD in the week, suggesting that investors expected this trend to be a temporary one.”
Key Quotes
“Even as EM Asia currencies gained against the USD for the week, fund outflows from the region worsened to USD2, 119mn from USD1, 517mn in the previous week driven by equities. We would have thought that a dovish FOMC statement on 18 March and the rally in Asia currencies would have promoted greater foreign buying of equities in Asia.”
“Domestic drivers appeared at play for the week, with most of the outflows driven by China equities. We think outflows in China might have been exacerbated by an 11 month low print in the HSBC China Manufacturing flash PMI.”
“India continues to be a shining star in the region, attracting inflows for the 10th consecutive week. Momentum might be waning though as it registered the lowest inflow since 21st January 2015 at USD94mn from USD412mn previously.”
“For the EM region as a whole (including Asia, Latam and EEMEA), while bond flows reversed to an inflow, outflows in local currency funds continued to stay heavy. This indicates that investors do not want exposure to EM currency risk even as EM currencies rallied against the USD in the week, suggesting that investors expected this trend to be a temporary one.”