We have spent a lot of time on EmergingMoney.com arguing for emerging markets (EM) outperformance to domestic markets (DM). This has been the right call and we feel there is merit to staying in the trade.
Friday night’s Trading the Globe on CNBC (tradingtheglobe.cnbc.com) pointed out the fund flows and how we believe this is a trade for 2013.
However, trading calls should take a tone of caution because it’s been a big move iShares MSCI Emerging Markets Index and fund flows are strong enough to trigger technical sell signals according to Global Fund Manager Survey.
Citi is out today with another interesting perspective on this highlighting both technical caution but not game over. Also note the valuation differential for EM vs. DM 12x v 13.6 Note from Citi’s strategy team, is worth quick read. We don’t think EM is overbought despite recent outperformance and inflows.
Certainly, the inflows into EM equities ties have been impressive. Year-to-date, flows are now $45 billon (7.8% of AUM), the third best year ever.
This is the 3rd best year ever…Flows to EM! And markets did not crash in June…That was the all in low for the year!
