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May 3, 2019 www.intellinews.com I Page 9
Bond flows into EMs and Russia flashing red, says BCS GM
Ben Aris in Berlin
Bankers warned that bond markets were “flash- ing red” after nearly a billion dollars left emerg- ing market (EM) bond markets in the last week, reports BCS Global Markets.
“Bond fund flow indicators are flashing red – first weekly outflows in 2019 from bond GEM funds were reported last week. Overall, net $0.9bn left all EM bond funds last week ending the inflows spree that has brought more than $25bn of fresh investor money into the asset class since the beginning of the year. We continue to highlight the negative momentum for bonds, and believe more outflows are on their way in the coming weeks,” Vyacheslav Smolyaninov, chief strategist and deputy
head of research at BSC Global Markets, said in a note.
Fund trading company EPFR Global just re- leased its weekly fund flows data through the
week ending April 24 that saw outflows from almost all emerging markets fund categories. Russian assets saw circa $15mn of net outflows from combined equity and bond fund flows in the reported week compared to circa $60mn
in the previous week. Russia-dedicated equity funds saw $20mn of outflows, down from $30mn the week before, which represents 11 weeks of outflows. There was also $8mn of outflows from Russia-dedicated bond funds.
Bonds have caught most of the attention this year with investors still largely ignoring the Russian equity market, according to Smolyaninov.
“For Russia-dedicated funds the reported fund flow data was almost the same as in the previous week – small inflows into the country- dedicated ETFs faced larger outflows from traditional funds,” the analyst said.