Global investors pull out $21 billion from emerging markets this year

Global investors have pulled out a whopping $21 billion (Rs 94,485 crore) so far this year from equity funds in emerging markets, amid rising inflation concerns and continuing political turmoil in the Middle East.

According to data complied by the international fund tracking firm EPFR Global, emerging markets’ equity funds have seen an outflow of over 21 billion since the beginning of this year. This is their longest outflow streak since the third quarter of 2008.

“Political turmoil in the world key oil producing region prompted many investors to revisit their previous assumptions for inflation, interest rates and economic growth,” the report noted. In recent months, many emerging markets, including India and China, are grappling with high price rise, which also poses the threat of even derailing the fragile global economic recovery.

However, EPFR did not disclose specific outflow figures for India-focused funds. According to information available with the Securities and Exchange Board of India, foreign institutional investors (FIIs) have pulled out nearly $2 billion from the Indian market during January-March after infusing a record $29 billion in 2010.

According to market experts in India, FIIs are mainly worried about sustained high inflation, soaring crude prices in the international market coupled with various scams, which are affecting the inflow. Also, the emerging markets bond funds struggled to attract fresh money. The report further said investors pulled a modest $2.02 billion from money market funds in keeping with recent trends, the US and global money market funds recorded outflows while their Japanese and European counterparts posted modest inflows.