Emerging markets see first weekly inflows since June: IIF
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E-mailBy Tariro Mzezewa
NEW YORK (Reuters) - Investors pumped an additional $13.9 billion into emerging markets in October, marking the first monthly inflows since June on expectations the U.S. Federal Reserve will likely delay increasing interest rates until next year.
Most of the inflows went to Asia, which received $9 billion, according to data from the Institute of International Finance, a Washington, D.C-based global trade group of financial institutions.
The sector's bonds had an additional $7.7 billion worth of cash invested while equities had $6.2 billion in inflows. The data includes assets bought by non U.S. residents in emerging markets and is used as a barometer of foreign investor sentiment.
Much of the investment into emerging markets in October was driven by investor expectations that the U.S. central bank will not raise interest rates this year, rekindling some appetite for these riskier assets.
"Looking at daily portfolio data, we saw a boost around the FOMC minutes, which further pushed the liftoff date for the interest rate hike into next year," said Scott Farnham, research analyst at IIF.
The Fed was believed to be close to raising interest rates in September but did not take any action. Minutes from that meeting, issued on Oct. 8, explained the decision to hold off was taken to wait for further evidence that a global economic slowdown was not knocking the United State off course.
Asia, Latin America and Europe saw inflows of $8.7 billion, $4.1 billion and $1.6 billion, respectively. Africa and the Middle East regions had a combined outflows of $500 million.
Although emerging market stocks and bonds attracted investment in October, this was below the monthly average of $22.4 billion seen between 2010 and 2014.
"I have very little conviction in this trend so far," said Farnham.
(Reporting by Tariro Mzezewa; Editing by Daniel Bases and Cynthia Osterman)
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