3 Feb 2014
Flash: EM outflows show growing importance of retail investors - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale has highlighted the growing importance of retail investors in today’s markets.
Key Quotes
"The outflows from EM funds show the growing importance of retail investors in driving markets and while some may dismiss them as lagging the news, the risk is, plainly, that they cause more indiscriminate moves out of markets with better fundamentals and in particular, that they encourage contagion not just from 'bad EM' to 'good EM' but from EM to developed market equities.”
“Meanwhile, the combination of weakening Chinese data, and the gradual turn in Fed policy, will continue to fuel negative sentiment. Flows of money into EM since 2010 have been huge."
"The path back towards any kind of neutral fed policy stretches ahead of us and the Chinese economic slowdown is no flash in the pan. So the drivers of the current turmoil aren't going to go anywhere and any respite is likely to be temporary.”
“In FX markets, the dollar, yen and Euro may well all benefit in their respective time zones, but the long-term winner should be the US dollar. The ‘DXY' dollar index is threatening to break through its 200-day average and that could spark acceleration, while Bloomberg's broader-based index has decoupled thanks to bigger weightings for EM currencies."
Key Quotes
"The outflows from EM funds show the growing importance of retail investors in driving markets and while some may dismiss them as lagging the news, the risk is, plainly, that they cause more indiscriminate moves out of markets with better fundamentals and in particular, that they encourage contagion not just from 'bad EM' to 'good EM' but from EM to developed market equities.”
“Meanwhile, the combination of weakening Chinese data, and the gradual turn in Fed policy, will continue to fuel negative sentiment. Flows of money into EM since 2010 have been huge."
"The path back towards any kind of neutral fed policy stretches ahead of us and the Chinese economic slowdown is no flash in the pan. So the drivers of the current turmoil aren't going to go anywhere and any respite is likely to be temporary.”
“In FX markets, the dollar, yen and Euro may well all benefit in their respective time zones, but the long-term winner should be the US dollar. The ‘DXY' dollar index is threatening to break through its 200-day average and that could spark acceleration, while Bloomberg's broader-based index has decoupled thanks to bigger weightings for EM currencies."