NEW DELHI, July 1: Investors seem to have cut their exposure to emerging markets, including India, as equity funds focussed on these countries witnessed redemptions to the tune of USD 10.5 billion during the second quarter of this year, EPFR Global says.
Investors have curbed their hunger for yield and cut their exposure to Europe and emerging Asian markets during April, May and June, as emerging market equity funds saw redemptions of USD 10.5 billion during the quarter, EPFR said.
Over USD 8 billion of that was pulled from Asia ex-Japan equity funds, it added.
According to the data compiled by international fund tracking firm EPFR Global, the Asia ex-Japan equity funds saw the biggest outflows as retail investors pulled money out of EM equity funds for the 17th straight week.
“The last week of June saw EPFR Global-tracked Emerging Market Equity Funds post modest outflows for the 10th time in 13 weeks as fears that China’s economy is headed for a hard landing and the toll from Europe’s woes dulled investor appetite for emerging markets exporters,” the report said.
However, the outflows from emerging market equity funds in the second quarter of this year were less than half of the USD 24.7 billion recorded during the third quarter of last year. It was also lower than the USD 23.7 billion redeemed in the first quarter of 2011.
Uncertainty about the true state of China’s economy was the biggest headwind facing Asia ex-Japan Equity Funds, besides, India’s mounting economic problems also weighed on the region, EPFR Global said.
“It’s possible that in an environment where yields on some short-term US and German debt are negative that investors are opting to hold more physical cash,” EPFR Global research Director Cameron Brandt said.
Last week of June saw EPFR Global-tracked equity funds post outflows of USD 7.7 billion and bond funds collectively seeing inflows of USD 4.7 billion, the EPFR report said. (PTI)
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