Emerging Market ETF Outflows Double as Losses Hit $12.4 Billion

Outflows from U.S. exchange-traded funds that invest in emerging markets more than doubled last week, with redemptions exceeding $12 billion in the third quarter. Taiwan led the losses in the five days ended Oct. 2.

Withdrawals from emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $566.1 million compared with outflows of $262.1 million in the previous week, according to data compiled by Bloomberg. Stock funds lost $483.5 million and bond funds declined by $82.5 million. The MSCI Emerging Markets Index advanced 1.9 percent in the week.

The losses marked the 13th time in 14 weeks that investors withdrew money from emerging market ETFs and left the funds down $12.4 billion for the quarter, the most since the first quarter of 2014, when outflows reached $12.7 billion. For September, emerging market ETFs suffered $1.9 billion of withdrawals.

The biggest change last week was in Taiwan, where funds shrank by $93.3 million, compared with $19.9 million of redemptions the previous week. All the withdrawals came from stock funds, while bond funds remained unchanged.

The Taiex advanced 2.1 percent. The Taiwan dollar strengthened 0.2 percent against the dollar and implied three-month volatility is 8.5 percent.

Brazil had the next-biggest change, with ETF investors redeeming $68.7 million, compared with $12.8 million of inflows the previous week. Stock funds fell by $64.1 million and bond ETFs declined by $4.6 million.

The Ibovespa Index gained 4.9 percent. The real appreciated 1.1 percent against the dollar and implied three-month volatility is 24 percent.

Following is a table detailing net inflows and outflows for emerging-market ETFs. The data include the index-weighted allocations from the biggest multi-country funds, such as the Vanguard FTSE Emerging Markets ETF and iShares MSCI Emerging Markets ETF, as well as country-specific funds:

================================================================
             Flow Week      Flow %    Equity      Bond      FX
Region      End Oct. 2      Change     Flow       Flow    Change
================================================================
Total         -566.1        116.0%    -483.5     -82.5      n/a
Taiwan         -93.3      -368.89%     -93.3       0.0     0.15%
Brazil         -68.7      -636.78%     -64.1      -4.6     1.08%
South Africa   -57.9      -276.28%     -54.4      -3.5     1.34%
China/HK       -52.6      -620.15%     -48.0      -4.6     0.27%
Chile          -45.4      -221.82%     -44.0      -1.3     1.77%
Mexico         -35.3        50.29%     -31.6      -3.7     1.27%
South Korea    -27.9      -315.48%     -25.2      -2.6     1.19%
India          -25.4        -2.24%     -25.3      -0.2     0.98%
Indonesia      -21.7       -20.69%     -18.9      -2.8     0.32%
Malaysia       -19.7      -120.01%     -16.4      -3.4    -0.65%
Turkey         -19.5       -33.58%     -16.5      -2.9     1.86%
Thailand       -15.4       -85.80%     -14.5      -0.9    -0.69%
Poland         -12.5      -260.74%      -7.1      -5.4    -0.39%
Philippines    -10.1        16.83%      -6.8      -3.3     0.07%
Singapore      -10.0       -21.55%      -9.9      -0.1    -0.52%
Peru            -6.1          n/a       -3.1      -2.9    -0.02%
Colombia        -5.4      -363.17%      -2.1      -3.4     1.80%
U.A.E.          -2.9      -100.53%      -3.7       0.8    -0.01%
Argentina       -2.0       -24.47%      -1.2      -0.8    -0.32%
Vietnam         -1.7      -553.81%      -1.6      -0.1     0.05%
Qatar           -1.4      -164.57%      -1.0      -0.4     0.01%
Egypt           -1.4       -96.77%      -1.1      -0.3     0.01%
Nigeria         -1.4      -262.46%      -1.4       0.0     0.27%
Russia          14.0       202.97%      16.7      -2.7    -1.47%
================================================================

Currency performance for China and Hong Kong is based on the yuan, stock index uses the Shanghai Composite Index.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE