By Tim Seymour
Major emerging markets ground their gears this week as one by one initially promising rallies stalled out. Still, positive fund flows encouraged many traders.
As reported elsewhere on the site, emerging markets mutual funds and ETFs gained a net $835 million this week, reversing their two-week losing streak.
Asian funds basked in their best flows since April as traders poured $244 million into China, Taiwan and Hong Kong — and the associated fund portfolios, like FXI , EWT and EWH , respectively. Still, money trickled out of India (INP) and Korea (EWY).
Brazilian funds like EWZ scored their best week since January with a $132 million inflow.
Russian funds like RSX continued to deflate as oil — the mainstay of the Russian economy — dipped back below $100 a barrel. In all, a net $120 million came out of Eastern European portfolios this week, the fourth week in a row of negative flows for the region.
In individual markets, Brazilian stocks edged up 0.15%, caught between a supportive technical set-up and a lack of follow-through for both of the country’s resource-driven heavyweight stocks, Petrobras [(PBR) and Vale (VALE)].
Stocks in Russia were almost completely unchanged. While downgrades for heavyweights like Gazprom [(OTC:OGZPY) still hung in the air, investors with a longer-term view looked eagerly to a $7 billion sale of Sberbank shares (OTC:SBRBF), which could emerge as soon as September.
In India, stocks ended with a slim 0.6% gain as an early 3% rally reversed. Still, Mumbai is in a technically interesting position here and strategists concede that a more sustained bounce could follow if food inflation recedes.
Chinese stocks effectively traded sideways but still printed a 0.7% gain on the week. On the one hand, traders are finding value in Shanghai again after a 10% correction from late April. But on the other, few took much comfort in the combination of disappointing manufacturing data and the potential for a rate hike ahead.