Sentiments dip in emerging market funds

Last week's stock market rout has cast a dark shadow on the emerging market equity funds where fund inflows significantly dried up after a robust performance so far this year.

Flows into the emerging market equity funds slowed to just $43 million in the week ended May 17, after averaging weekly inflows of nearly $1.6 billion so far this year, Emerging Portfolio Fund Research said on Wednesday in its weekly fund report.

The market observers said that the performance might have slumped even further after May 17, as investors are likely to have accelerated their fund withdrawals with most of the emerging markets including India continuing to witness heavy selling pressure with a few exceptions.

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EPFR which tracks 10,000 funds worldwide with more than 5 trillion in total assets said that the emerging market equity and bond funds recorded one of their worst weeks in terms of fund flows this year on the back of inflation concerns in developed markets and aggressive profit booking in high-yielding emerging and commodity markets.

Both the Bombay Stock Exchange's benchmark 30-share index Sensex and the Morgan Stanley Capital International Emerging Market index shed more than 15 per cent during the ten-day period ended May 22.

MSCI Emerging Market index, which tracks shares in 26 developing markets, recorded its biggest 10-day slump in the past eight years before staging a modest recovery on Tuesday.

The BSE Sensex also closed in the positive territory on Tuesday after shedding more than 2,000 points in the past ten trading sessions.