Emerging stocks funds now lead declines this year, Lipper says

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(Reuters) – Hammered by the fallout from a surge in U.S. government bond yields, mutual funds and exchange-traded funds that invest in emerging stock markets are now this year’s biggest investment losers, according to Refinitiv Lipper data.

FILE PHOTO: A woman looks at an electronic board showing the recent fluctuations of market indices on the floor of Brazil’s B3 Stock Exchange in Sao Paulo, Brazil, April 3, 2019. REUTERS/Amanda Perobelli

Funds that invest in Colombia, Argentina and Brazilian equities have slumped over 10% on average, the biggest among the 502 categories listed by Lipper. The categories include equities, bonds, commodities and other assets across the world.

Graphic: Top 10 decliners among mutual funds this year –

At the start of this year, many investment banks and funds bet on emerging-market equities on optimism over vaccine rollouts and hopes of a faster recovery from the pandemic.

But such hopes were quashed by the spurt in U.S. bond yields in recent weeks, as higher market interest rates raised borrowing costs for emerging-market firms and prompted capital outflows from typically higher-yielding emerging economies.

The main emerging-markets equities index has lost about 5.6% in the past month, led by declines in China, Turkey and Philippine indexes.

Graphic: Emerging market equities’ performance this year –

The abrupt removal of Turkey’s central bank chief and worries over a new COVID-19 wave in Europe sent a new shiver through emerging-market stocks this week.

Analysts have cut their 2021 profit forecasts for companies in Argentina, Colombia and Turkey by over 5% each in the last month, the data showed.

Graphic: Emerging market companies’ earnings estimates change –

Reporting By Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru; editing by Patrick Graham, Larry King

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