Investors were expecting quarter-point interest rate hikes from the US Federal Reserve and European Central Bank (ECB) in early May. They got them, along with the collapse of another American regional bank, a warning from Treasury Secretary Janet Yellen that the US may not be able to pay its bills in June if the debt ceiling standoff persists and more violent protests against pension reform in France.
Flows to and from EPFR-tracked fund groups during the final week of March continued to paint a picture of risk aversion and fear among investors. For the third week running liquidity funds recorded above average inflows while High Yield, Bank Loan, Emerging Markets Bond and Alternative Funds extended their current outflow streaks.
Russia’s invasion of Ukraine shifted investor sentiment towards China, India and other APAC emerging markets in 2022. Are they keeping momentum this year?
With the one-year anniversary of Russia’s attack on Ukraine looming, the latest US inflation data showing headline inflation down and core inflation up, the Bank of Japan weeks away from a change in leadership and Sino-US tensions rising, investors found it hard during the second week of February to sustain their earlier optimism.
Despite China’s first steps away from the zero-Covid policies that have sapped its economy and some optimistic forecasts for 2023, investors tapped EPFR-tracked Emerging Markets Equity Funds for $2.4 billion – a 13-week high outflow – in early December 2022.
Since the COVID-19 pandemic started accelerating in Italy in late February, European markets have tumbled. Almost all European stocks are in negative territory year-to-date irrespective of sector, industry, or country of origin. In terms of scale, the quarterly drop is the highest in 33 years, and the intensity of it is unusually high – more than 35% of the total market capitalization has been lost in only three weeks.
