A week can be a long time in markets.
Just 7 or 8 trading days ago, emerging market (EM) outflows were scaring investors from Bombay to Boston and back, causing EM currencies to collapse along with stock markets in the emerging and developed world.
The March SPI 200 (futures contract for the ASX 200) traded under 5000 at the time. This afternoon, it is trading at 5304 – more than 6% off its low of 8 days ago.
The S&P 500 futures are likewise trading higher at 1821 in Asian trade, up just over 5% from a low of 1731.
The recovery could make you think that emerging market problems had gone away, but as the chart below from the ANZ shows, this is far from the case.
The ANZ noted: “Portfolio outflows from Emerging Asia remained large at US$2,231m in the week ending 12 February, though it was down from previous week’s US$4,235m.”
It seems to be about the ebb and flow of risk appetite amongst investors with EM equity outflows slowing materially but the takeaway from the ANZ from all this is that “improved risk appetite has benefited mainly developed markets while portfolio outflows from emerging markets continued.”
I guess that just means, watch this space.
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