Inflows into emerging market equity funds continued for the ninth straight week in November, the longest such streak in the last six months.
Emerging markets were the only region that saw inflows of $2.55 billion during the week ending November 7, 2012, even as all the other regions such as the US, Europe and Japan faced redemption pressures, according to Bank of America Merrill Lynch.
Better growth prospects compared with the developed markets, fair valuations and rising interest in China and India seem to be driving the monies.
Rikesh Parikh, vice-president, markets strategy and equities at Motilal Oswal Securities, said concerns relating to economic growth in China seems to be easing and with it having underperformed the developed markets such as the US in a big way, the investors are finding value there.
Chinese equity funds received net inflows of $ 443 million, as per EPFR Global, a US-based firm that tracks flows and allocation of traditional and alternative funds domiciled globally.
India equity funds saw small outflows of $9 million after receiving nearly $223 million in the previous four weeks.
Meanwhile, the flows have been dominated by exchange traded funds (ETF) even as long-only funds have engaged in redemptions.
“Out of total $1.13 billion inflows into equity funds last week, ETFs pumped in $2.98 billion, while long-only funds sold equities worth $1.85 billion. The redemptions from long-only funds have now extended to 17 straight weeks – the longest since 2008 financial crisis taking out $71.99 billion from equities so far this calendar year,” wrote Michael Hartnett, Kate Moore, Brian Leung and Swathi Putcha, global equity strategists at Bank of America Merrill Lynch, in a note.
Experts believe the positive bias will continue in the near term. “The sentiment has turned a little positive and we may see more reforms such as building a consensus on Goods & Service Tax and land acquisition Bills before the Parliament session. The Indian market is likely to trade with an upward bias as there are not too many events lined up except for the US fiscal cliff,” said Rajesh Cheruvu, chief investment Officer at RBS Private Banking.