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US$25 billion flows into emerging markets in 1Q '17
July 3, 2017, 5:34 pm

The net portfolio flows to Emerging Markets (EM) have totaled US$ 41 billion in the first two months of the 2Q of 2017, bringing the six-month moving average to US$ 25 billion for the first time since November 2014, a report has said.

The markets continued to outperform as foreign inflows picked up, the latest report by the National Bank of Kuwait (NBK) added on Monday. The MSCI EM index was up 6 percent in the 2Q 2017 as fears of more protectionist US trade policies took a backseat.

The markets, along with other risky asset classes, benefitted from the continued flow of positive data from advanced economies. Flows picked up supported by easy monetary policies by the major central banks and a gradual predictable path for Fed rate hikes, the NBK report stated.

According to the report, the Gulf Copperation Council (GCC) markets continued to underperform with most ending the quarter in negative territory. Sentiment in the region remained closely linked to oil prices which fell below US$ 50 per barrel despite the recent extension of production cuts by OPEC.

Meanwhile, corporate earnings announcements did not provide much support to equity prices in 2Q 2017 across the GCC. The growth in the 1Q profits of 630 listed GCC companies was strong at 18 percent year-on-year.

Profit announcements were also better than expected with a sample of companies announcing earnings that were on average 3 percent higher than expectations. However, markets seemed unfazed by either the strong results or reduced valuations that now look quite attractive.

As for activity in regional markets, it weakened notably with all of them seeing declines in turnover, as the daily traded value averaged US$ 1 billion, down 30 percent compared to the previous quarter.

Kuwait saw the sharpest drop in activity following an exceptionally strong first quarter, and regional activity declined further as the summer season and Ramadan approached. 

Source: KUNA

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