Is a Shift Into Western Equity Markets Near?

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 |  Includes: AAPL, BAYRY, CCE, RDS.A, SBUX, SWGNF
by: Dutch Trader
Lately some people have noticed that I also write other articles (non-China). That’s completely true. I am a European citizen, work at a European bank and know about European companies. My focus is US-listed China stocks, because I really think you find great companies trading at bargain prices - or should I say bankruptcy prices?
I think diversification is important. That’s why I am also writing other articles. In recent weeks a lot of capital has been shifting toward Europe and other Western capital markets
If you look to the redemptions in the ETF-space you can come to the conclusion that emerging markets are out of favour.
Top 10 Redemptions (All ETFs)
Ticker
Name
Net Flows ($,mm)
AUM ($, mm)
AUM % Change
(NYSEARCA:VWO)
Vanguard Emerging Markets
-744.92
42,553.96
-2%
(QQQQ)
PowerShares QQQ
-510.86
25,955.14
-2%
(NYSEARCA:EEM)
iShares MSCI Emerging Markets
-324.15
37,216.03
-1%
(NYSEARCA:XLE)
Energy Select SPDR
-292.74
9,284.14
-3%
(NASDAQ:AAXJ)
iShares MSCI All Country Asia ex-Japan
-162.22
2,186.95
-7%
(NYSEARCA:MDY)
SPDR S&P MidCap 400
-156.97
12,431.08
-1%
(NYSEARCA:XME)
SPDR S&P Metals and Mining
-101.45
1,039.01
-9%
(NYSEARCA:XLB)
Materials Select SPDR
-65.40
2,668.48
-2%
(NYSEARCA:XOP)
SPDR S&P Oil & Gas Exploration & Production
-57.79
910.14
-6%
(NYSEARCA:IEF)
iShares Barclays 7-10 Year Treasury Bond
-45.67
2,813.07
-2%
Click to enlarge
Source: etfuniverse.com
The high inflation in emerging markets is, for a lot of investors, a reason to reduce exposure.
A lot of institutional investors may prefer Western stock markets in coming months, although Emerging Asia and Emerging Latin America are still overweighted in most portfolios.
Top 10 Creations (All ETFs)
Ticker
Name
Net Flows ($,mm)
AUM ($, mm)
AUM % Change
(NYSEARCA:SPY)
SPDR S&P 500
165.44
93,922.07
0%
(NYSEARCA:EWJ)
iShares MSCI Japan
161.79
5,655.90
3%
(NYSEARCA:IWM)
iShares Russell 2000
158.27
15,838.96
1%
(NYSEARCA:EPP)
iShares MSCI Pacific ex-Japan
126.98
4,232.54
3%
(NYSEARCA:EWG)
iShares MSCI Germany
116.19
2,556.26
5%
(NYSEARCA:EWC)
iShares MSCI Canada
96.25
5,303.55
2%
(NYSEARCA:IYR)
iShares Dow Jones U.S. Real Estate
88.48
3,267.81
3%
(NYSEARCA:IWF)
iShares Russell 1000 Growth
60.54
13,487.67
0%
(NYSEARCA:MOO)
Market Vectors Agribusiness
56.71
3,702.99
2%
(NYSEARCA:TBT)
ProShares UltraShort 20+ Year Treasury
49.55
5,927.18
1%
Click to enlarge
Source: etfuniverse.com

Markets such as the US, Europe and Japan are interesting because shares are relatively low priced.
Especially in Europe there are many shares with a lower beta, which hardly profited from the recovery in the markets. P/E ratios in sectors such as energy, technology and health care are still below historical average. So maybe you will see some shifts toward these sectors.
If you look at what banks and other institutions advise their clients you see a lot of the following names: Apple (NASDAQ:AAPL), AXA, Bayer AG (OTCPK:BAYRY), Coca Cola (NYSE:CCE), Royal Dutch Shell (NYSE:RDS.A), Starbucks (NASDAQ:SBUX), Swatch (OTCPK:SWGNF), etc.
Despite these temporary shifts, emerging markets such as China, India and Latin America are worthy investment targets for the long run.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.