Fund flows indicate overbought emerging markets

By Prieur du Plessis, on April 25th, 2010 posted in: Emerging markets, Stocks

As of Wednesday, equity fund flows into emerging markets have stayed positive in 10 consecutive weeks. “Going back 10 years, this historically correlates with at least a short-term correction in emerging market stocks,” said a report by US Global Investors – Weekly Investor Alert.

Source: US Global Investors – Weekly Investor Alert, April 23, 2010.

Emerging stock markets were the first to turn the corner after the credit crisis sell-off – a full four months before the majority of indices bottomed in March 2009 – and is being watched closely to ascertain whether this market would be the first to spell danger for global stocks. Will the underperformance of emerging markets versus mature markets during April turn out to be the proverbial canary in the coalmine?

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Graeme

April 25, 2010 at 11:47 am

The Emerging Market Chart portrays data to 21/4/2010. The chart labels on the x axis indicate up to Q3/Sept 2009.
It is unclear what the data presents or how it should be read.

With a lag effect, I would expect the current price index to be presented as 21/4/2010 and the 10 weeks trailing cash flows cummulative for 21/4/2010 to been up to w/e 16th april or data from a cummulative cash flow from Feb to April 2010.