February 11, 2019 / 11:57 AM / 4 months ago

Citi says clients cautious on emerging markets after four weeks of inflow

A woman works at a workshop of a textile manufacturer in Binzhou, Shandong province, China February 11, 2019. China Daily via REUTERS

LONDON (Reuters) - Investment bank Citi said on Monday that its clients had turned cautious on emerging market assets over the last week, with both real money and leveraged investors pulling out funds following four weeks of inflows.

“Perhaps anxiety over U.S.-China trade talks, negative data surprises out of Europe, corrective move lower in equities etc. weighed on investor appetite,” Citi’s Dirk Willer wrote in a note to clients, referring to the week ending Friday Feb. 8.

There was some divergence across regions, Citi found in its research, based on flows of its own clients.

Outflows from Latin American markets were dominated by real money investors - a category that includes mutual, pension and sovereign wealth funds - pulling out of Chilean, Colombian and Peruvian assets. Leveraged money, which tends to be more speculative in nature, fled Brazilian assets, it added.

Meanwhile, exposure to assets from Central and Eastern Europe, Middle East and Africa continued to expand, with special emphasis on the high-yielding currencies in the region, Citi added.

EM flows: tmsnrt.rs/2TPTqwA

Reporting by Karin Strohecker

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