EM FLOW FUNDAMENTALS - EM fund flows face tricky start to 2025

• Bloomberg ETF fund flows data for the week ending Friday 24th January paints a negative picture for Emerging Market sentiment.
• EM Equity ETFs registered a second straight week in negative territory after tallying a net outflow of USD145mn, albeit up from the previous week’s reading of USD923mn tally.
• EM Fixed Income ETFs also remained in the red, printing a net outflow of USD526mn, down from last week’s negative reading of USD127mn.
• The MSCI EM Currency Index climbed to an over 1-month peak of 1742.59 on Thursday, as riskier assets advanced this week amidst a weaker Dollar following Trump inauguration earlier this week (January 20th).
• Looking at the week ahead, there will be a handful of central bank decisions to keep an eye on in EM. On Tuesday, the NBH are expected to stand pat at 6.50%, which will be followed by the Chilean decision later that evening, also seen unchanged at 5%. The BCB will gather on Wednesday, where markets have priced in a 100bps hike and the SARB will meet (Friday) a day after the FOMC, and is anticipated to slash rates by 25bps to 7.50%.
• Fed chatter was muted this week as FOMCers entered their usual blackout period ahead of next week’s interest rate decision (January 29), where no change is expected to borrowing costs. That was unable to provide the greenback a safety net in its decline this week.

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