GEM Equity Funds Outflow continues

In the week ended 23 Feb 2011, EM & developed equity market seen outflows.

 

Over the past five weeks, ~USD 20bn has been pulled out of emerging-market equity funds.

 

 

USD mn	GEM equity	Developed Equity	GEM Fixed income
2-Feb-11	(7,000)	6,600	n/a
9-Feb-11	(3,000)	4,600	(477)
16-Feb-11	(5,500)	12,130	(741)

  

    23-Feb –11         (1,890)                      (1,930)                                     96

 

Source: EPFR

 

Comment:

If Oil prices sustained at high level then it would be negative for US, severe for EM Asian countries (Except Malaysia & Vietnam) & developed Europe. (Mainly because of Net oil importers, secondly EM Asian countries high food & fuel weights in CPI basket, I also have explained the reasons in detail  in my last research note “Oil impact on World growth”)

In BRIC, Russia is the only country which benefits from high oil prices. Interestingly, Russia is the only EM country in World’s top 15 Oil exporters.

On the other hand, if Oil prices sustained at high level its positive for E&P sector & commodity linked securities. Therefore we would see inflows to energy funds & companies whose profits linked to commodities.

 

Regards,

Irfan