Repatriate!

Emerging Markets Junkies, here is that dip you’ve been waiting for…

The one-way trade of the last 18 months has finally seen a reversal of flows – money is now being yanked out of the BRICs at an increasing pace.

From USA Today:

Investors are fleeing emerging markets funds — which may in itself push down those markets further.

Worldwide, investors yanked a record $7 billion from emerging markets funds the week ended Feb. 2, according to EPFR, which tracks the funds. That’s about 1% of the funds tracked by EPFR, says Brad Durham, the company’s managing director.

The average emerging markets fund, which invests in small or developing stock markets, has fallen 2.8% this year, according to Lipper.

The “no-brainer” emerging markets investment was on every strategist’s lips this past fall, now it’s become a rout for those who plowed in with abandon.  And because asset flows tend to chase in and out, the impact on the indexes and share prices is immediate when the money runs away.  And in case you’re new around here, down prices from selling tend to beget more selling.

Memo to the Precious Metals pile-on people…guess who’s next!

Source:

Investors Are Evacuating Emerging Markets Funds (USA Today)