Exchange traded funds that track the emerging markets experienced their worst weekly outflows since August last week. However, anxious investors may have dumped holdings prematurely as the oversold market rallied Tuesday.
Investors yanked over $2.12 billion out of U.S.-listed emerging market ETFs in the week ended January 15, with China and Hong-Kong ETFs leading the losses, reports Kenneth Kohn for Bloomberg. Stock funds lost $1.89 billion while bond funds shrunk by $234 million.
Year-to-date, investors have redeemed $2.69 billion from emerging market ETFs.
The outflows come as global equities stumbled in the new year, with some of the worst performers out of the developing markets. So far this year, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) declined 12.1% and iShares MSCI Emerging Markets ETF (NYSEArca: EEM) fell 11.6%. In contrast, the S&P 500 dropped 7.9%.
While emerging markets have been falling faster than less risky areas, developing market stocks are also showing greater upswings. For instance, on Tuesday, VWO rose 0.9% and EEM gained 1.0%, whereas the S&P 500 was 0.4% lower.
China- and Hong-Kong-related ETFs experienced $469.7 million in outflows last week. However, the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), which tracks mainland Chinese A-shares, was among the best performing ETFs Tuesday as speculators bet on further stimulus measures out of Beijing to prop up a slowing economy.
Additionally, Taiwan ETFs saw $302 million in redemptions ahead of the election weekend. After Tsai Ing-wen and the Democratic Progressive Party won a victory in both presidential and parliamentary elections Saturday, Taiwanese stocks rallied, with the iShares MSCI Taiwan ETF (NYSEArca: EWT) up 2.7% Tuesday.
Vanguard FTSE Emerging Markets ETF
Max Chen contributed to this article.