ETF flows show signs of revival in emerging markets, but India an outlier

India saw pull-outs from emerging market (EM) exchange-traded funds (ETFs) over the past week, despite flows in such ETFs having shown signs of revival. The ETFs withdrew $31.3 million for the week ended February 14. China, on the other hand, saw inflows of $37.3 million. Most of the EMs saw positive flows, with Indonesia the only other to see some outflow ($5 million) during the week. 

According to foreign fund managers, receding worries regarding a major global outbreak of Coronavirus led to improved sentiment. "Rising COVID-19 fears, notably around Chinese growth, led to the first cut in a survey of fund manager about global growth, profits, and inflation expectations, held since October 2019,” BofA Securities said in its fund manager survey note. 

The survey pointed out that allocation to EM equities rose 3 percentage points to 36 per cent overweight (OW), the highest OW status since March 2019. Overall, EM ETFs saw flows of $265.8 million during the week. In previous weeks, they had seen outflows.