Emerging markets are now hot money back

The trend of global capital flows from emerging-market equity funds "countercurrent" to developed-country markets in late January was reinforced by the market's forecast for better growth in the first half of the year, according to data released January 28 by the professional Capital flow monitoring agency, EPFR (Emerging Markets Investment Fund research). As of the week of January 26, 2011, the flow of emerging-market equity funds from EPFR globally tracked the first "outflow" in 5 weeks and the largest outflow since the third quarter of 2008. , and the developed market Equity fund, which has been tracked by EPFR, has been showing net inflows for the 7th week in a row for the past 8 weeks.　　Capital inflows into Japan and European equity funds hit 43-and 34-week highs respectively, while global emerging market (GEM) equity funds suffered their worst week in nearly three years. Capital accelerated the withdrawal of emerging-market equity funds in the fourth week of January this year, high valuations in emerging markets, inflationary pressures, capital controls, renewed political risk of concern and a weakening dollar have "expelled" more than $3 billion trillion from emerging markets, Asia (except Japan), which are tracked by EPFR globally. and Latin American equities.　　Equity funds in EMEA alone (Europe, the Middle East and Africa) have managed to keep the inflow of new funds under the influence of market funds on Russia's still lower commodity prices and Africa's relatively decoupled economic growth. Stocks from Asia (except Japan) climbed to their highest level in 37 weeks last week as Thailand's political tensions, rising inflationary pressures in China and India, stock market declines in Indonesia, and the mood of the dollar. Among them, China's equity funds reached the highest weekly redemption since the second week of May last year, just before the holiday.　　Indonesia's equity fund has also suffered its biggest outflows in nearly 10 years. Inflation is also a major concern for investors in Latin America. The unofficial rate of inflation in Venezuela and Argentina has exceeded 20% per cent, while Brazil's inflation rate is also climbing.　　Equity funds in Latin America have been showing net outflows for the fifth week in a row over the past 7 weeks, as investors ' allocations to Latin America tend to be in Chile's equity-type funds.　　Into the EMEA region (Europe, Middle East and Africa) equity funds are largely driven by investor demand for Russia and Africa, where equity funds have seen net inflows for 19 weeks over the past 20 weeks, while funds from the African region have been net inflows for the 75th time in the past 78 weeks.　　In the fourth week of January, the market for equity funds in developed countries has attracted capital inflows for the second consecutive week in the five markets of the developed market Equity fund, which has been tracked by the world, partly benefiting from the return of retail investors. The European Equity Fund, a developed-country fund market that retail investors have shunned for the first time since last June, has absorbed more than 1 billionDollar inflows as investors began reassessing the region's economic outlook, encouraged by better than expected macroeconomic data.　　Despite renewed interest in Germany's equity funds, equity funds in Europe and the UK are still showing solid capital inflows as of January 26. While the continued weakness of the dollar remains a major problem for Japanese exporters, the recent downgrade of Japan's sovereign debt rating underscores the need for Japan's long-term fiscal and monetary tightening, and investors are starting to focus on capital-account spending and exports, which are expected to rebound later this year.　　Japan's equity fund has seen a net inflow of funds for the eighth consecutive week, and the total capital inflows since this year have climbed to a high of $1.5 billion trillion. At the same time, U.S. equity funds have been showing net inflows for the seventh time in the past 8 weeks as retail investors have reached the highest level since the end of the third quarter in 2009. Money favours those value-investing funds that perform better than those of growth funds.　　In addition, the ratio of active management funds to total capital inflows gradually climbed to 62% per cent.　　Equity funds in the global and Pacific region-two of the most geographically dispersed developed market equities-have continued their fourth consecutive week of net capital inflows. Commodity capital outflows hit a record high in the industry, the world-tracking Commodity industry fund has had a tough week, thanks to a renewed confidence in the US economic outlook. Those who had previously invested through gold and other precious metal hedging funds began looking for riskier, higher-return investment options.　　Even as prices for soft goods and industrial goods remain high, and tin prices have recently reached record highs, the total capital outflow of such funds last week was at its all-time high. This year, the net inflow of funds to the largest two sectors of science and technology funds and real estate funds.　　The former was affected by strong news reports in the fourth quarter of 2010, with net inflows amounting to $1.76 billion trillion, while real estate funds were driven by ultra-low interest rates in most developed countries. In addition, expectations of a rise in oil supplies prompted investors to withdraw funds from energy funds for the third time in the past 5 weeks. As the Republican-controlled House of Representatives tries to undo the health-care reform bill passed last year, Medicare and biotech funds are also showing a modest outflow of cash.