Over the past week, funds from developed countries lost about $ 12 billion of investments, emerging markets funds lost almost $ 4.5 billion. International investors are withdrawing from their restored value in anticipation of a global economic downturn. Enviable stability is demonstrated by Russian funds, interest in which is supported by positive dynamics in oil prices and upcoming dividend payments.
International investors have stepped out of stocks, according to Emerging Portfolio Fund Research (EPFR). According to Kommersant’s estimates, based on Bank of America data (taking into account EPFR data), for the week ending May 6, customers of all equity funds took away $ 16.3 billion. This result is 2.5 times more than the week-ago indicator and the maximum since the end Martha. At the same time, the main outflow of funds fell on the funds of developed countries. According to EPFR, it exceeded $ 11.7 billion, which is 3.5 times more than a week ago. Most actively, investors withdrew money from US funds – according to EPFR, about $ 9.3 billion was taken from US funds, almost six times more than a week earlier. The outflow from European funds slowed from $ 2.7 billion to $ 1.8 billion.
In less than two months, thanks to massive financial support from the central banks of leading countries, stock indices have recovered a significant part of their losses. So, the S&P 500 index won back 60% of the March fall, and the MSCI EM index – over 40%. According to Valery Vaysberg, Director of the Analytical Department of the Region Group of Companies, global stock markets have achieved the goals of corrective movement and now investors are taking profit.
At the same time, concern about weak macroeconomic data published in various countries is only growing.
In particular, unemployment in the US in April rose to a record 14.7%, that is, 20.5 million people lost their jobs in a month. According to Ravil Yusipov, Deputy General Director of the TFG Management Company, after a quick rebound, many investment houses made statements that the stock market is in the largest discrepancy with the forecasted profit levels and its multiples look unreasonably high. “There is growth in quantitative terms, but the quality of growth is low,” notes Mr. Yusipov.
Prospects for reducing demand from developed economies lead to the withdrawal of investors from the markets of developing countries. According to EPFR, in the reporting week, funds whose investment policy is focused on emerging markets lost almost $ 4.5 billion against $ 3.4 billion a week earlier. The largest outflow of funds in the BRIC countries came from the funds of China ($ 1.5 billion) and Brazil ($ 328 million).
Russian funds stood out from the overall picture, the net inflow of which amounted to $ 16 million per week (a week earlier, $ 5 million was withdrawn from them).
Analysts attribute the interest shown to the recovery in oil prices. According to Reuters, quotes for the nearest Brent oil futures have been holding at $ 30 per barrel for a week already. The cost of Russian Urals oil is around $ 25 per barrel. In addition, investors expect dividend payments for the year for Russian issuers. “The Russian market pretty well experienced the April fall in oil prices, not least due to the expected payment of high dividends for 2019 and the activity of local investors. Forecasts on the profits of the largest issuers, although they suggest a significant decrease, remain positive, which allows counting on dividends for 2020, unlike many foreign companies, ”says Valery Vaysberg.
Further development of the market situation will be determined by the generosity of leading financial regulators. In particular, market participants do not exclude that the US Federal Reserve, following the example of the ECB, may for the first time in history lower its key rate below zero by December this year. This is evidenced by futures on the federal funds rate. “The money wall from global regulators is able to give confidence to investors. Russian stocks remain attractive – oil prices have moved away from the lows, and the securities themselves look cheap as a result of the weakening ruble, ”said Ravil Yusipov. However, according to him, so far “the current inflow into Russian funds looks more like a niche than a long-term trend.”