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March 22, 2019 www.intellinews.com I Page 3
case it has always been the last of the BRICS to attract foreign capital and even then it has been in small amounts compared to its peers. Foreign positions in Russia’s stocks and bonds look very underweight compared to the other emerging markets, says IIF.
“For the third time in four weeks, EMs overall saw net outflow, according to the EPFR Global data for the week to March 13. Some $2.8bn exited
the asset class, equivalent to 0.23% of sampled AUM [assets under management],” Sberbank
CIB analysts Cole Akeson and Andrey Kuznetsov said in a note. “EMs had not seen a single week of outflows this large since June 2018. Recently weak macro data for China and Europe, and at best mixed data for the US, have hampered risk sentiment in recent days. On the other side of the coin, US equities saw net inflow of $25.4bn, according to the Financial Times, citing EPFR, likely due to diminished risk appetites.”
The vast bulk of that outflow, almost $2.3bn, came out of Asia ex-Japan funds, equating to some 0.48% of their sampled AUM. Meanwhile, global emerging market funds saw net outflow of $203mn (0.03%), and EMEA funds saw net outflow of $169mn (0.53%), Sberbank reports.
Russian funds have been particularly battered and were bypassed by funds during the upswing
earlier this year. Russia was the worst off in AUM terms, at $167mn, or 0.29% of the total.
Russian equity dedicated funds have seen five weeks of uninterrupted outflows, according to EPFR Global, partly due to Calvey's arrest on February 14, but this was also the time of heavy news flow on the impending new Defending American Security Against Kremlin Aggression Act (DASKAA) sanctions that may be passed in April.
The general outflow from funds with Russian exposure was circa $170mn, up from circa $90mn in the previous week – the fourth week of outflows.
“Outflows hit all EM fund categories in the last week,” says Slava Smolyaninov, chief strategist and deputy head of research at BSC Global Markets. “Investors are losing faith in EM stocks, the data shows. It is hard to find a single country or regional group of funds that saw inflows in early March. Most outflows were in Asia, as a total of $2.3bn left funds focused on the region, including $1bn out of China funds – the largest outflows in 2.5 years. Russia funds reported a poor week, the second in a row, of more than $100mn outflows, mostly via ETFs. GEM funds that have cumulatively received $19bn in 2019 were also net losers for the first time this year.
It is hard to see any support for the Russian stock