EMD sell-off continues
Net outflows from emerging market debt slowed by less, falling from €7.2bn in August to €4.5bn in September. Especially euro-denominated emerging market debt continued to suffer unusually large outflows. In August and September combined, almost €3bn was withdrawn. The last time outflows approached this number was in June 2013, during the taper tantrum…
Flows into emerging market debt are likely to stay negative for a bit longer, if European fund selectors do as they have told us over the past couple of months. Even the Finns are not massively planning to buy more: buyers match sellers with each about 20% of the pie, while a quarter of Finland’s fund buyers have no exposure at all to the asset class. Nonetheless, they are still Europe’s most upbeat about emerging market bonds.
Emerging market bonds are not the only fixed income asset class which is out of favour at the moment. Developed market government and corporate bonds as well as high yield bonds all recorded net outflows in September.
