Investors yanked more than $6.3 billion from emerging market equity funds last week, the largest outflow on record in dollar terms. Boston-based fund tracker EPFR Global said the outflow was broad based and the biggest in three years as a percentage of assets under management. Institutional investors accounted for $5 billion of the redemptions.
Emerging markets have been hit this year by a perfect storm of rising interest rates in the U.S., fears of a slowdown in China, political turmoil, and concerns that emerging market economies haven’t reformed fast enough to make growth sustainable.
The sell-off has gathered pace since Argentina gave up trying to defend the value of its currency last month. Central banks in India, Turkey and South Africa were forced to jack up interest rates last week to try to halt the exodus.
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