Global investors pull out record funds from emerging markets

Global investors pulled out $14.45 billion from emerging market bonds in the week ended 12 June as interest rates for long-term (30-year) US mortgages climbed to a 14-month high, US-based global fund tracker EPFR Global said in a release.

Investors also pulled out another $8.5 billion from emerging market equities during the week ended 12 June amidst fears that the US Fed might tighten its monetary policy in the second half of the year.

The redemptions, mostly on high yielding, intermediate term and municipal bond fund and mortgage backed corporate funds also hammered key equity indexes, EPFR Global said in a report.

According to EPFR, Japanese equities and Chinese bonds saw increased inflows of funds even as equity fund flows to Germany hit a 51-week high.

''Flows into equity funds in Germany anchored overall flows into Europe equity funds as some investors bought into predictions that growing exports from the Europe's biggest economy, allied to a general shift towards more stimulatory fiscal policy, will drag the region out of recession later this year,'' EPFR said in its report.

Equity markets in China, Switzerland, Brazil and Russia, on the other hand, saw fresh outflows, the report said.

However, energy and industrial sectors in emerging markets continued to attract funds with investment inflows of over $20 million.

The alternative energy sector also saw an overall fund flows climb to a five-week high during the week.

The euro zone debt crisis has impacted flows to Europe and the Middle East and Africa (EMEA) equity markets.

The US central bank has been holding on to a quantitative easing programme with monthly buys of $85 billion in bonds, in a bid to help keep markets buoyant since the global financial crisis.