Investors pull out $12 bn from emerging market funds: EPFR

Investors pulled out more than USD 12 billion from equity funds focused on emerging markets including India in the July-September quarter on concerns over the US Federal Reserve's plan to curtail stimulus drive as well as tensions in Syria, says a report.

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According to funds tracking company EPFR Global, USD 12.18 billion has flown out of emerging markets equities funds during the third quarter of 2013. It noted that emerging markets equity funds posted back-to-back quarterly outflows for the first time since the second half of 2011. "Emerging markets investors had plenty to worry about during the third quarter, ranging from the possible tapering of QE3 (Quantitative Easing) to fears that the US and Europe could become embroiled in Syria's civil war," EPFR noted.

"Those fears, and concerns about Chinese growth, eased during the final weeks of the quarter, and EPFR Global-tracked emerging markets equity funds carried a three week, USD 6 billion inflow streak into the final days of September," it added.

EPFR said the rebound was driven solely by institutional investors, as retail investors have not committed fresh money to this fund group since the first week of April. At the country-wise level, equity funds focused on China witnessed a withdrawal of (USD 4.7 billion) in the July-September quarter, Brazil (USD 1.4 billion), Russia (USD 777 million) India (USD 357 million), Turkey (USD 300 million) and Mexico (USD 101 million).

However, Korea saw a net inflows of USD 577 million for the quarter ended September 30. Although equity funds focused on emerging markets remained under pressure, there were signs that pressure was easing in late September as diplomatic initiatives in the Middle East, signs of economic recovery in emerging Europe and enthusiasm for Africa story helped end a six week outflow streak, EPFR said.