In the past few weeks the Indian market has been losing its nerve and falling extensively. Most market analysts see sell of exchange traded funds (ETFs) as one of the main reasons for this weakness.
In the past few weeks the Indian market has been losing its nerve and falling extensively. Most market analysts see sell of exchange traded funds (ETFs) as one of the main reasons for this weakness. However, Cameron Brandt, Dir-Research, EPFR Global does not believe so.
"Index needs to fall to trigger big redemptions. It is more a case of actively managed funds rotating positions and a general uncertainty about the outlook for EMs as a whole," he said in an interview to CNBC-TV18.
Despite recent dips seen in emerging Asian markets, investors are paying more attention to these regions. "With India and China acting as two anchors for emerging Asia, I would expect to see an uptick in flows into emerging Asian funds, not a smooth and steady one, but somewhat bumpy over the next couple of months," he elaborated.
Meanwhile, he cautioned investors of a volatile April.
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Below is the verbatim transcript of Cameron Brandt’s on CNBC-TV18
Q: India has underperformed in the past week compared to many Asian markets and developed equity markets. Have you noticed any outflows, especially from Exchange-Traded Funds ( ETF ) that invested in India?
A: Yes. March and April have been rough months for emerging markets (EMs) in general and the emerging Asia fund groups in particular. In case of India, it is slightly more collateral damage. There are two reasons that are spooking the investors in the region, one is Korea specific the Sabre-rattling on the peninsula, the other is fears that Japan’s aggressive efforts to drive down the value of its currency are going to trigger a currency war in the region that will hurt the export stories of a lot of markets.
Q: Can you break up the flows from March into how much has gone into developed markets and how much has gone out of EMs?
A: During March and into the first few days of April about USD 3 billion have been pulled out of emerging market equity funds while roughly USD 26 billion has flowed into developed market equity funds. It comes with a caveat, that money on the developed side is bypassing euro funds, with the bulk of it going into dedicated US & Japan equity funds.
READ MORE ON EPFR Global, Market, EMs, ETFs, FIIs, Korea , Japan, Sabre-rattling, US, Brazil, emerging Asian
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