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Investors pull billions from emerging mkts

Investors disillusioned by the implosion of Wall Street titans, economic anemia in Japan, and a debt debacle in Europe have found abundant opportunities to grow wealth in industrialising economies such as China and India.

business Updated: Mar 02, 2011 20:59 IST

Investors disillusioned by the implosion of Wall Street titans, economic anemia in Japan, and a debt debacle in Europe have found abundant opportunities to grow wealth in industrialising economies such as China and India.

But now, as Middle East burns and discontent over escalating food prices is heard in the developing world, investors are moving cash out of emerging markets - and back into what they hope are the stable havens of the US, Europe and Japan.

That represents a major shift in sentiment since the financial crisis in 2008 upended conventional wisdom as to what is risky and what is safe as the US model of freewheeling capitalism teetered on the brink of collapse.

According to fund tracker EPFR Global, fund managers and other investors yanked $5.45 billion from emerging markets funds in China, India, Brazil and elsewhere in the second week of February and placed it in equity funds of advanced economies - their biggest weekly inflow in more than 30 months.

Developed market funds recorded their seventh straight week of inflows in mid-February - with European equity fund flows hitting 41-week highs. So far this year, investors have committed $47 billion to US, European, Japanese and global equity funds - $29 billion of it into the US alone.