When investing in the Emerging Markets, one factor which can be seen as both a positive and negative is the volatility of EM indices. What can quickly escalate upwards can just as rapidly come crashing down.
Source: MSCI
The market faced a significant fall through 2018 as a result from the US trading wars which is believed to be resolved by the end of this month. The US dollar's rally might also grind to a halt as the US Federal Reserve has decided to leave interest rates as they are for the time being. Emerging Markets are one of the leading borrowers for US dollars and therefore means they can borrow more capital due to the favouring FOREX rates. As a result of this and several other factors, Emerging Markets could be showing signs of a strong 2019.
Yesterday saw several Emerging Market ETFs face significant inflows, according to data provided by Ultumus. The UBS MSCI Emerging Markets UCITS ETF (EGUSAS) saw inflows of over $525m, increasing its Assets Under Management by 42.42% to $1.8bn. This was one of the largest flows in assets yesterday, second only to the Vanguard FTSE Emerging Markets ETF (VWO) which had inflows in excess of $875m, boosting its AUM to nearly $61.5bn.
Another EM ETF making an appearance in the top 10 flows was the SPDR Portfolio Emerging Markets ETF (SPEM), receiving $160m in assets.
Some of the funds' largest holdings have received good news this week, including Tencent (4.77% weight in holdings) which has had a 10-month long Chinese freeze lifted, enabling it to release games in the country again. Additionally Alibaba (3.70%) has received positive feedback from one of its major investments, Ele.me, a delivery service which has reported significant improvements in its last mile delivery capabilities.
