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At the country and sub-regional level Emerging Europe equity funds posted outflows for the 24th time in 25 weeks while Africa regional funds extended their outflow streak to 15 straight weeks. Korea equity funds recorded a fourth straight week of inflows.
Market funds absorbed $26.4 billion in net inflows last week, Europe equity funds took in $1.06 billion and Asia ex-Japan funds posted their second consecutive week of inflows against a backdrop of positive performance for most major equity fund groups that ranged from 0.78% for Japan equity funds to 6.09% for Europe, Middle East and Africa (EMEA) equity funds.
The investor flows suggest continuing stabilisation of flows after a disastrous October, EPFR Global notes.
Fixed income funds continue to bear the brunt of the outflows, with global and US bond and balanced funds all recording net outflows of more than $1 billion last week and emerging markets bond funds extending their losing run to 15 straight weeks.
EPFR Global-tracked Europe equity funds extended their winning streak in late November to four weeks and $2.7 billion as investors positioned themselves in anticipation of another 50 basis point interest rate cut in early December. Unlike its peers, the European Central Bank, whose key rate is 3.35%, still has room for significant easing. Bargain hunting among some of the cheapest developed market equity has lifted key indexes over 10% during the past week.
Pacific equity funds recorded modest inflows as investors factored in ChinaÆs stimulus measures to demand for Australian and New Zealand commodity exports.
Outflows from emerging markets equity funds slowed in late-November as risk aversion dropped in the face of continued interest rate cuts, new stimulus measures and the impending arrival of a new US administration. Lower Chinese interest rates underpinned flows into Asia ex-Japan equity funds, and outflows from the other major emerging markets fund groups ranged from $459 million from the diversified global emerging markets equity funds to $70 million from Latin America equity funds.
Not surprisingly, China equity funds pulled in $213 million in net inflows as authorities there cut interest rates by over 1% and loosened bank reserve requirements. Of funds geared to the four major Brazil, Russia, China and India (Bric) markets, China equity funds are the only ones to see significant inflows since the beginning of the third quarter.
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