Page 10 - bne Magazine Apri20

10 I Companies & Markets bne April 2020
Russian assets see all-time record $1.4bn of outflows in a week
bne IntelliNews
Russian assets saw an all-time record $1.4bn outflows from investors from its combined equity and bond securities in the week ending March 18 compared to an outflow of $590mn the week before, according to EPFR Global, which tracks investment flows.
“A wave of outflows of historic size hit all sorts of EM funds. Russia-dedicated funds reported $238mn of outflows led by active funds, with country funds managed by BNP Paribas and HSBC accounting for the majority,” Vyacheslav Smolyaninov, chief strategist and deputy head of research at BSC Global Markets, said in a note.
Markets were in freefall in the two weeks after the coronavirus (COVID-19) spread from Asia and rocked countries around the world. To add to the pain, oil prices slumped again to under $25, their lowest level in almost two decades as demand evaporated as one country after another went into lockdown.
The dollar-denominated Russia Trading System (RTS) sank to a low of 832, half of its January high of just over 1,600. All the sectors have sold off, with oil and gas taking the brunt of the selling, down by 49% YTD as of March 20.
Russia-dedicated equity funds sold c$240mn, ten times the outflow from the week before and the third week of selling. The combined EM equity funds that include Russia saw an
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outflow of c$640mn, which was three times more than the previous week, reports BCS GM, the worst week of selling since August 2011.
Russia has not been singled out, as there were outflows from all global equity funds, which amounted to $5.9bn. But that still made the combined outflows figure for Russian stocks one of the worst in history: the total of $640mn of outflows is the worst since the US sovereign rating downgrade in August 2011.
“Russia has not been singled out,
as there were outflows from all global equity funds, which amounted to $5.9bn. But that still made the combined outflows figure for Russian stocks one of the worst in history”
“Remarkably, there were even larger outflows in January 2008, when it became clear that the US was heading for a recession – history does rhyme in fund flows,” says Smolyaninov. “We