The U.S. Slow-Down Is Sending Investors Overboard Into Emerging Markets


Investors have once again sought a safe haven in emerging markets, after the downturn in U.S. economic growth data:

EPFR Global:

Against a backdrop of disappointing US employment, manufacturing and housing markets data, investors steered their cash into emerging markets funds during early August as they sought protection from the dollar weakness they believe will follow. Flows into EPFR Global-tracked emerging markets equity funds hit a 38-week high during the seven days ending August 4, with Global Emerging Markets (GEM) Equity Funds having their best week since late 4Q08, while Emerging Markets Bond Funds took in over $600 million for the ninth consecutive week.

The prospect of further credit market support has also ramped bets on higher risk bond funds.

The prospect of fresh measures by the US Federal Reserve to stimulate credit, which include keeping interest rates extremely low, also helped High Yield Bond Funds and Real Estate Commodity Sector Funds post strong inflows

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