It’s almost unbelievable how rapidly investors are yanking their money out of the Emerging Markets.
The sucking sounds particularly loud in the EM debt markets.
“Emerging Markets debt-dedicated funds recorded net outflows of $5,578MM (2.19% AUM) for the week ending on June 26, 2013, reports EPFR,” said Morgan Stanley’s Robert Habib. “This is the largest outflows ever recorded by EPFR from EM-dedicated funds, twice as large as last week’s $2.6bn outflow. This is also a third of the net inflows into EM-dedicated funds year-to-date.”
The numbers are breath-taking.
And this is troubling as these developing economies are at risk of a sudden stop —the nightmare scenario where a country effectively gets shut out of the global credit markets.
Earlier today, bond god Jeff Gundlach recommended investing in the emerging markets as a contrarian idea.
Here’s a geographic breakdown:
This chart offers some historical context to the magnitude of the outflow.
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