Resurgent Emerging Markets See Biggest Inflows

A shift by investors' back into emerging market assets gathered pace over the last week, with China and Russia seeing some of the biggest demand as EM inflows reached their highest rate in over a year.  Data from Boston-based fund tracker EPFR, which monitors funds with $23 trillion in assets, showed combined inflows to EM debt and equity funds climbed to $4.7 billion in the week to April 9.  Banks and investors have started buying back into the emerging market story in recent weeks, noting that sector valuations now are cheap enough to compensate for economic weakness and political risks.

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-Igor P. Purlantov

Emerging Markets Provides Opportunity For Investors

For the better part of a year, investors have been reading about a “crisis” in emerging markets. By now you’re likely familiar with the myriad of headlines that include buzzwords such as “higher inflation,” “slower growth,” “political turmoil,” “rising interest rates” and “currency depreciation.”  We saw a spike in these negative headlines near the lows in early February of this year. Although there is always some element of truth in these fear-inducing headlines, the question for investors is, "What should I do about them?"

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-Igor P Purlantov

Emerging Market Currencies Continue to Rally

The rally in emerging-market currencies continued Wednesday, propelling the South Korean won to its strongest level in more than five years against the dollar.  The won surged over 1% Wednesday to hit 1,038.3 per dollar, its strongest level since Aug. 2008.  "A huge current-account surplus, strong growth, and now falling unemployment are the recipe for this move," said Kit Juckes, a macro strategist at Société Générale in London.  Against a backdrop of falling U.S. Treasury yields, as expectations of early rate rises from the Federal Reserve recede, emerging-market currencies have performed strongly of late.

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-Igor P Purlantov

Emerging Markets Still In CEOs’ Sights

Shifting U.S. monetary policy, local politics, and less vibrant growth rattled investors’ confidence in emerging markets at the start of the year. Yet developing-country currencies and bond markets have rallied strongly in recent weeks.  The latest big moves by Europe-based multinational companies underscore why investors’ confidence in long-term emerging-market growth looks warranted.  Take the $50-billion merger between France's Lafarge SA and Switzerland’s Holcim. Much of the immediate focus is whether the two cement, concrete and aggregates suppliers can convince anti-trust watchdogs in North America and Europe, regions where their operations overlap, that they can sell assets to mitigate competition concerns.  

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-Igor P. Purlantov

Learn to Communicate With Animals

The Animal Protective Foundation of Malta is sponsoring an animal communication class taught by David Louis in May. Now is the time to register to save your place.  Have you ever wondered what your animals are thinking or feeling, or felt that they were trying to communicate with you but you weren't able to understand? David Louis began practicing the art of animal communication in 2001, and since then he has communicated with thousands of animals, and taught hundreds of people how to do the same.

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-Igor Purlantov

Emerging Market Currencies Rally Against Dollar

Emerging-market currencies rallied against the dollar after a report showing a moderate increase in U.S. jobs assuaged worries about rising interest rates.  Investors and analysts said the data, which showed the U.S. economy adding slightly fewer jobs than economists expected in March, reduced the chances that the Federal Reserve would move up its timetable for cutting bond purchases and raising rates.  That eases the pressure on currencies, stocks and bonds in developing countries, which have struggled for much of the past year, as the Fed moved to unwind policies aimed at supporting the U.S. economy by keeping borrowing costs low. 

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-Igor P Purlantov

Cash Trickles Back to Emerging Markets

Investors are starting to move back in to emerging stocks and bonds after a long hiatus, data from fund tracker EPFR shows, but the economic slowdown gripping the developing world is likely to constrain market rallies. Emerging stock and bond funds saw their first weekly inflows after more than $50 billion fled in the first three months of 2014, with equities snapping a 22-week losing streak, Boston-based EPFR Global said. The company, which tracks funds with $23 trillion in assets, released details of first quarter flows late on Thursday, showing that all emerging equity fund categories had shed $41 billion, following $26.7 billion losses in 2013.

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-Igor P Purlantov

Emerging Markets Regaining Confidence of ETF Investors

Emerging markets drew the largest investment flows among U.S. exchange-traded funds last week on bets developing-nation stocks will rebound after they fell to the cheapest relative to developed-nation peers since 2006.  Investors added a net $1.6 billion into ETFs focused on emerging-market equities and bonds in the five days through March 28, helping trim the outflow this year to $12 billion. Flows into the iShares MSCI Emerging Markets ETF, the second-largest of its kind, totaled $1.4 billion, the most among the almost 2,000 U.S.-based funds tracked by Bloomberg.

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-Igor P Purlantov

Jumping for Emerging Markets Junk Bonds

The first quarter was kind to exchange traded funds holding U.S. high-yield corporate debt as default rates remain benign.  The iShares iBoxx $ High Yield Corporate Bond ETF and the SPDR Barclays High Yield Bond ETF , the two largest U.S. high-yield bond ETFs, have remained sturdy despite rising anticipation the Federal Reserve will raise interest rates sooner than expected, speculation that has prompted elevated short interest in the two funds.  High-yield corporate debt from emerging markets issuers is catching investors’ attention as well, even with the spotlight on corporate defaults in China. Even with a 12.5% weight to China, by far its largest country allocation, the Market Vectors Emerging Markets High Yield Bond ETF gained nearly 4% in the first quarter, outpacing comparable U.S.-focused ETFs along the way.

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-Igor P Purlantov

Investors Cast Fresh Eye on Battered Emerging Stocks

Investors are starting to look afresh at emerging equities after years in which the sector has been a consensus "sell".  Barclays, Citi, HSBC, Morgan Stanley and Societe Generale are among banks now advising clients to buy back in - albeit selectively - after a prolonged sell-off that has slashed valuations.  "The timing of that decision will determine people's performance (for the year)," said Fredrik Nerbrand, global head of asset allocation at HSBC, who has a 40 percent portfolio exposure to EM-related assets through hard and local currency debt, commodities and equities.  "When I talk to investors, most people agree with us on a valuation basis, but are concerned about the headline risks that still persist in some emerging markets."

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Igor Purlantov