Mar
13

Hedge Funds Exit Emerging-Market Assets as Real Money Swoops In

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  • Real money 4-week FX inflows near highest level in 16 months
  • Divergence with hedge fund flows widest in Latin America

Short-term investors are escaping emerging markets ahead of a likely U.S. interest-rate hike this week amid concern a strengthening dollar will undermine credit quality in developing nations.

Meanwhile, longer-term investors have increased their exposure, pointing to equity and currency valuations that linger below their five-year averages and arguing developed nations from the U.S. to France carry greater political risks.

The divergence between the two camps hasn’t been this pronounced since October 2015. Over the past four weeks, hedge funds and other leveraged investors posted their biggest emerging-market currency outflows since early December, while institutional money managers such as pension funds boosted their inflows to near the highest level in 16 months, according to data from Citigroup Inc…

Hedge Funds Exit Emerging-Market Assets as Real Money Swoops In

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