By Gordon Platt
Investors are pumping fresh money on a sustained basis into equity funds investing in emerging Europe, according to Cambridge, Massachusetts-based EPFR Global. In the week ended September 2, emerging Europe equity funds took in net new money for the seventh straight week.
Overall, equity funds in Europe, the Middle East and Africa (EMEA) fared the best among the major equity fund groups in the week ended September 2, bringing the year-to-date total for the region close to positive territory. “The flows into the region continue to be driven by a re-rating of Central European markets and Turkey,” according to EPFR Global.
Eastern European markets were among the strongest performers in the second quarter of 2009. Turkey, often included in this region, was among the top markets, with a return for the quarter of 57.2% in dollar terms. Hungary returned 69.7% in dollar terms, in part due to a strong forint.
Emerging market stocks as a whole rose to a high for the year on September 8, hitting levels not seen since before the collapse of Lehman Brothers. According to MSCI groupings, emerging market stocks were up 55% year-to-date, versus 14% for the US market and 19% for the developed world.
Rising industrial commodity prices could put pressure on consumers in Eastern Europe and Asia, says Win Thin, senior currency strategist at Brown Brothers Harriman. “We’re not worried about inflation but are focusing more on the negative wealth effect of having to pay higher prices for commodity imports,” he says.