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Global fund selector EM demand weakens further

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As Expert Investor highlighted last week, demand for global emerging market equities among pan-European fund selectors slumped dramatically during Q2 2018.

Data collected by Last Word Research in Asia shows sentiment toward global emerging market equities – and Asia-Pacific ex-Japan equities – among fund selectors across Asia has declined significantly.

Last Word quarterly survey of 12-month forward-looking sentiment among fund selectors in Hong Kong, Singapore, Thailand and Malaysia, shows a markedly lower interest in buying global emerging market equities in June 2018, when the most recent data was collected, compared with the result three months earlier.

Long-term sentiment toward global emerging market equities among Asian fund selectors

Data: Last Word Research

In June 2018, only 28% of respondents said they would add to their allocation in the next 12 months, compared to 60% in March 2018, while 30% said they would reduce it, compared to only 4% in March.

The sentiment, which Last Word measures by subtracting the number of sellers from the number of buyers, dropped below zero in June for the first time since FSA started collecting data in early 2017. It indicates that more fund selectors plan to reduce their allocation than to increase.

A similar, if smaller, change in sentiment has been noted for Asia-Pacific ex-Japan equities. While still positive, the June numbers show the lowest sentiment level toward the sector since FSA started collecting data.

Long-term sentiment towards Asia-Pacific ex-Japan equities among Asian fund selectors

Data: Last Word Reserch

This shift in sentiment is likely a result of the uncertainty brought on by the trade tariffs the US and China imposed on each other earlier this month, Isaac Poole, chief investment officer at Oreana Private Wealth told sister title Fund Selector Asia.

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David Robinson

David Robinson is the editor of Expert Investor. He has 18 years’ experience as a business journalist and editor. In the past he has written for the Guardian newspaper and The Telegraph, and worked as...

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