EM FLOW FUNDAMENTALS - A mixed week for EM ETF fund flows

• Bloomberg ETF fund flows data for the week ending Friday 11th April paints a mixed picture for Emerging Market sentiment.
• Another impressive week for EM Equity ETFs, which attracted a huge net inflow tally of USD 23.99bn, up from last week’s USD2.931bn print.
• Following two straight weeks in the green, EM Fixed Income ETFs are back in the red after posting a net outflow tally of USD2.072bn, down from last week’s +USD604mn result.
• Risker assets such as those in EM took a hit this week, with the MSCI EM Currency Index falling to a two-month low of 1736 on Wednesday. The index was above to climb back above 1745 towards the end of the week after the Dollar (DXY) fell to its lowest level in over three years (99.01).
• Note, US tariffs caused EM debt to decline across the board, with sovereign and corporate dollar-denominated bonds of every country posting losses. .
• Looking ahead into next week, the sole interest rate decision in the region will come from the CBRT (Thursday), which will likely pause its monetary easing and stand pat at 42.50% following a hard slide from the lira last month. We do expect policymakers to resume the rate-cutting cycle as inflation eases later in the quarter. Elsewhere, the ECB will also gather (Thursday) and is fully expected to lower the DFR by 25bp to 2.25% as focus shifts to growth from inflation.

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