Capital outflow from funds investing in Russian stocks breaks record again – experts

(Interfax – MOSCOW. April 12, 2013) Capital outflow from funds investing in Russian stocks was at its highest in the last half year in the week of April 4-10, totaling $393 million, compared to $68 million the previous week, according to Emerging Portfolio Fund Research (EPFR) data.

From the beginning of this year to April 10, total outflow from funds investing in Russian stocks was $1.182 billion.

Investment company Uralsib Capital said in a report that outflow from funds investing in Russian stocks was at one of its highest levels since the crisis years of 2008-2009. Outflow was higher only three times prior to that, the experts said.

“Investor attitudes toward various emerging markets are polarized. Favorites are registering record inflows, but outsiders, on the contrary, are losing more and more. Russia, unfortunately, is an outsider. Record or near-record amounts of money entered into funds in Mexico ($540 million), Indonesia ($163 million) and the Philippines ($129 million) last week. In the EMEA region Turkey was once again first, receiving $56 million in new cash. Among the losers were China (-$644 million), which was followed by Russia (-$393 million), Brazil (-$92 million) and India (-$87 million),” Uralsib Capital reported.

This spring will turn out to be extremely unsuccessful for Russian funds. After a very weak March, outflows are only intensifying in April, the analysts said.

“After crisis-hit 2008, investors withdrew their funds at similar rates only in August and September 2011. And since investors are not yet in any hurry to buy shares in emerging markets, outflow from Russian funds is becoming the determining factor for the market. Even more signs are emerging that investor concern in connection with the Russian economic slowdown is growing, and that, amid unfavorable price forecasts for oil and other types of commodities, pushes them to reduce their presence on the Russian stock market. As positive news is hardly likely to be forthcoming from the macroeconomic front earlier than June, in the short-term, the mood of market participants, in our opinion, will remain negative,” Uralsib Capital reported.