Friday, February 11, 2011

Credit Suisse: USD11.5 bln flowed out of global emerging markets in 3 wks

KUALA LUMPUR: Global emerging markets recorded US$11.5 billion of outflows in funds, of which almost half were from China and Brazil, in the past three weeks, according to Credit Suisse.

It said on Friday, Feb 11, the amount exceeded the US$4.85 billion of outflows in January-February 2010 and the US$5 billion of outflows during the May 2010 correction. However, the cumulative inflows into the emerging markets were still US$71 billion since January 2010.

It said of the US$11.5 billion of outflows from the emerging markets, China recorded an outflow of US$2.8 billion and Brazil (US$2.2 billion).

Credit Suisse noted that in both cases, the outflows are much larger than their MSCI weights. For China, outflows of US$2.8 billion were 24% of the total versus China's MSCI weight of 17.4% in the global emerging markets.

For Brazil, the outflows were 19% of the total versus Brazil's MSCI global emerging market weight of 15.3%.

It said Taiwan and South Korea were the most under-owned on EPFR data, which also showed Taiwan and South Korea to be the most under-owned markets within the global emerging markets.

On a rolling 12-month basis, inflows into Taiwan were 7.2% of the total versus Taiwan's MSCI weight of 12.1%. Similarly, inflows into Korea were 11.2% of the total, versus Korea's MSCI weighting of 14.6%.

The research house said India continued to be the crowded trade with inflows over the past 12 months accounting for 9.1% of the emerging market total versus a MSCI weight of 6.9%.

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