Withdrawals from emerging market stock funds slowed last week as the prospect of faster economic growth in the largest developing countries lured investors back to funds investing in India, Brazil, Russia, and China.
Net redemptions amounted to about $500 million for the week ended June 28, Brad Durham, Boston-based managing director at Emerging Portfolio Fund Research, said on Friday.
Losses were stemmed by inflows to so-called BRIC funds that invest in India, Brazil, Russia, China and India country funds. They garnered a combined 100 million dollar for the week, figures from Emerging Portfolio, which tracks 15,000 funds with more than $7 trillion in assets, showed.
Funds investing in shares of developing countries lost an average of $3.1 billion each week in the five previous weeks on concern that higher interest rates will stifle economic growth and make emerging-market equities less attractive.
The flood of redemptions exacerbated a sell-off in emerging- markets, with the Morgan Stanley Capital Emerging Markets (Int) Index plummeting 25 per cent from a record on May 8 to a more than six-month low on June 13.
Since then the index has rallied 11 per cent. Today, the MSCI's emerging-market index gained 2.2 per cent in Tokyo, bringing its advance to 5.7 per cent this week.