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Back You are here: Home Market Market Update News Biggest Outflow in Emerging Markets Since the Financial Crisis $9.3B

Biggest Outflow in Emerging Markets Since the Financial Crisis $9.3B

Emerging Markets suffered $9.3B outflow in the week to Thursday (2015-06-11), the most since the depths of global financial crisis in 2008.  Of the $9.3B, $7.1B came from Chinese equity funds, which had previously seen three weeks of robust inflows including a record $4.6B in the last week of May.  Global EM Funds saw $829M of withdrawals, while Latin America funds lost $442M.

Obviously, China's equity market contributed to the main source of outflows.  Shanghai and Shenzhen stock indices have both more than doubled in the past 12 months.  The rally has been characterised by the opening of millions of new retail trading accounts, soaring share turnover and rapidly increasing margin debt.

The Shanghai Composite now trades at 25.7 times current earnings, up from just 9.7 times a year ago. Mainland listings are now typically 38 per cent more expensive than their Hong Kong counterparts, a sign of a growing disconnect between onshore and offshore markets.

On 2015-06-09, MSCI chose not to add mainland-listed Chinese stocks to its global emerging market index, which might be one of the key reasons contributing to the China's equity outflow.

Reference

  1. Financial Times, Josh Noble, 2015-06-12, "Emerging Markets Suffer Biggest Weekly Outflow in 7 Years"