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By Tim Seymour

The fund flows for ETFs really paint the picture for Emerging Market investors across the board. On the first day back after the Chinese New Year, we see redemptions across the large Emerging Market ETFs: EEM, VWO and EWX (Emerging Market smallcap) totaling about $110mm while we see $135mm flowing into EWJ (Japan).

The sizes are smaller, but the trend of out of Emerging Markets into Developed Markets is still intact. FXI (China) has also been a victim and has lost almost $1billion this year. The flow this morning has seen selling in FXI, VWO, and INP (India) and buying in EWM (Malaysia).

We reviewed some of this shift on Monday,with the notion of keeping an eye on emerging debt funds in particular. Watch EMB, ELD, EDD, MSD.

We have seen a shift to Vanguard’s VWO (from iShares/Blackrock EEM) mainly because the borrow is cheaper in light of the large redemptions in EEM. Also, Adrian Mowat is calling for another 10% correction in MSCI EM to conform to typical EM corrections of 15-20%. He reiterates that technicals are more important in corrections than fundamentals.