Emerging Market ETF Inflows Near $1 Billion Wipe Out 2-Week Loss

Investors added $936 million to U.S. exchange-traded funds that buy emerging-market stocks and bonds, erasing two weeks of losses.

Deposits into emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $936 million in the week ended Oct. 9, compared with withdrawals of $828 million over the two previous periods, according to data compiled by Bloomberg. Stock funds collected $982.4 million and bond funds declined by $46.4 million.

The MSCI Emerging Markets Index advanced 6.9 percent in the week, the most since the week ended Dec. 2, 2011. A measure of developing-nation currencies rose the most in 17 years.

ETFs still have a long way to go before they break even for the year in emerging markets, with net outflows of $5.2 billion.

Last week, the biggest change was in India, where funds collected $150.9 million, compared with $25.4 million of redemptions the previous week. Investors contributed $151.7 million to stock funds and removed $800,000 from bonds.

The S&P BSE Sensex advanced 3.3 percent. The rupee strengthened 1.2 percent against the dollar and implied three-month volatility is 7.35 percent.

Mexico had the next-biggest change, with ETF investors adding $135.9 million, compared with $35.3 million of outflows the previous week. Stock funds grew by $141.4 million and bond ETFs decreased by $5.5 million.

The Mexico IPC Index gained 3.8 percent. The peso appreciated 2 percent against the dollar and implied three-month volatility is 12.35 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:

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              Flow Week      Flow %     Equity     Bond     FX
Region        End Oct. 9     Change     Flow       Flow   Change
================================================================
Total             936.0      265.4%     982.4     -46.4     n/a
India             150.9     693.20%     151.7      -0.8    1.20%
Mexico            135.9     484.65%     141.4      -5.5    1.99%
Russia            133.9     858.93%     135.7      -1.7    7.92%
South Africa       79.7     237.67%      82.5      -2.8    2.85%
Taiwan             75.1     180.50%      75.1       0.0    2.01%
Malaysia           71.7     463.78%      77.0      -5.3    6.91%
China/HK           61.9     429.54%      63.1      -1.2    0.19%
Indonesia          58.1     367.28%      61.3      -3.2    9.20%
South Korea        41.3     248.14%      46.0      -4.7    3.17%
Turkey             20.4     204.82%      23.6      -3.2    2.76%
Chile              19.6     143.32%      21.2      -1.5    1.67%
Philippines        18.6     284.59%      19.1      -0.5    1.88%
Brazil             18.1     126.38%      24.7      -6.6    4.51%
Thailand           16.3     205.83%      20.1      -3.8    2.48%
U.A.E.              5.0     269.46%       5.0       0.0    0.00%
Qatar               4.8     434.20%       4.1       0.7    0.00%
Poland              4.6     136.68%      10.4      -5.8    1.95%
Vietnam             4.6     374.27%       4.5       0.0    1.25%
Colombia            3.0     154.80%       5.5      -2.5    5.24%
Peru                1.0     116.91%       1.9      -0.8    0.37%
Argentina           0.2     109.15%      -0.1       0.3    0.97%
Singapore          -0.1      98.74%      -0.1       0.0    2.74%
Nigeria            -1.1      20.47%      -0.1      -1.0   -0.32%
Egypt              -2.3     -65.26%      -2.4       0.1    0.07%
================================================================

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

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