Great Graphic: EM Funds Report Net Inflows

This Great Graphic was tweeted by Susan Lund. Drawing on data from McKinsey, the chart depicts that for the first time since the so-called taper tantrum last year, emerging market equity and bond funds are experiencing net inflows.  

The key issue remains the same.  To what extent are these flows driven by improved fundamentals and structural reforms and to what extent is the emerging market attraction a function of liquidity.

We see the flows as mostly opportunistic and an exercise in "making hay while the sun shines."  An important test will come as the market prepares for the first rate hikes from the G7.  The Bank of England seems best positioned to be first.  We look for a hike in Q1 2015.  The most likely scenario is for the Federal Reserve to  prepare the market in the first part of 2015 for a hike in second half.  We currently would pencil in the first hike in late Q3 or early Q4. 

Great Graphic: EM Funds Report Net Inflows Great Graphic:  EM Funds Report Net Inflows Reviewed by Marc Chandler on June 10, 2014 Rating: 5
Powered by Blogger.