Investors are selling assets of developing countries for the second consecutive week
In the week before June 19, emerging market-oriented funds (ETFs) traded on US exchanges recorded a net capital outflow of US$624.1 million, Bloomberg reported. Thus, investors are selling assets of developing countries for the second week in a row (net capital outflow was recorded in 17 of the last 18 reporting periods and since the beginning of the year amounted to US$17.9 billion.
Russian assets recorded a net capital outflow of US$10.8 million: equity funds lost US$2.5 million and bond funds lost US$8.3 million. Before that, Russian assets recorded the largest capital inflow in EMEA for two consecutive weeks.
Almost a third of the total capital outflow from emerging market equity funds came from the largest U.S. equity-based ETF (iShares MSCI China ETF, (MCHI)). The net capital outflow from this US$5.5bn fund was US$206m.
Last week there was some progress in trade negotiations between the U.S. and China, which supported risky assets. However, this positive momentum was counterbalanced by new concerns about the arrival of the second wave of coronavirus. In addition, there were new geopolitical risks associated with the conflict between China and India over the disputed border.
EM stock exchange funds recorded a net capital outflow of US$504 mln, while similar bond funds recorded a net outflow of US$120.2 mln.