Gartman: Emerging Market Flows Will Go Straight to U.S.

The money that has poured out of emerging market funds is no cause for concern for financial markets, as it will be supportive for developed market equities, according to widely-followed investor Dennis Gartman.

Emerging markets have seen record outflows, according to new data from fund flow tracker EPFR Global, which showed that funds from the region this week were hit with the worst outflows since 2008.

But rather than holding that money in cash, investors will plough it into North America and Europe, where the political environment is more stable, the editor and publisher of The Gartman Letter told CNBC.

“I actually think if money moves from China, money moves out of emerging markets (EM), money will ask the question: ‘Where shall I go?’ and wise money will say to itself: ‘I am going to go where the yields are best, where the political circumstances are the least difficult to understand,” Gartman said.

“It doesn’t go from one area and goes to the sidelines…If it comes from EM and China, it will come to the U.S., it will come to Canada, it will come to Europe.”

Some $9.3 billion leaked from EM funds in the week to Thursday, EPFR said, with $7.1 billion exiting Chinese equity funds.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.