US BASED EMERGING MARKET STOCK FUNDS POST $2.6 OUTFLOW, BIGGEST OUTFLOW SINCE FEBRUARY 2011-LIPPER

Picked up the headline from Zerohedge. I think this has just began and expect to see more slump in emerging market stocks because of the Fed tapering. It will likely have a domino effect on majority of the emerging market stocks and possibly trickle down to frontier markets. We have already seen a drop in share values in the Nairobi Stock Exchange with Foreign participation reducing to circa 47%.

"BoAML: Harnett Flow Show: First Signs of Panic: Bottom Line: EM debt and equity funds see combined outflows of $9.1bn; magnitude which almost rivals outflows during Taper (May'13), Debt Ceiling (Aug'11) and Lehman (Sep'08). Outflows over past 3 months are substantial; $42bn or 4% AUM. Specifically, “stampede” out of equity ETF's; $12.3bn redemptions which are the largest since Jul'12. It is also the largest EM equity fund outflows since Aug'11 ($6.4bn). $15bn outflows over next 2-3 weeks will trigger contrarian "buy" signal from our EM Flow Trading Rule (3% threshold). In fixed income, note largest EM debt fund outflows since Jun'13 ($2.7bn) with the selling concentrated in local debt markets. Commodities continue to be shunned, with largest outflows in 5 weeks ($1.5bn)." Here is an interesting commentary by BOAML that I picked up from Milan: