After hearing news of QE tapering, retail investors have been fleeing from emerging market stocks, bonds and currencies, Erin McCarthy of The Wall Street Journall writes. Mom and pop investors have pulled out almost twice as much as institutional investors, withdrawing $18.8 billion from market bond funds (one-third of the amount they had put in since the crisis) compared to $9.3 million withdrawn on the institutional side (about 10 percent of post-crisis inflows) since the beginning of June.

Though the individual amounts retail investors take out are small, collectively their actions are making the emerging markets selloff worse than it would be otherwise, McCarthy writes. It's a significant shift from the outlook retail investors had after the financial crisis, which was to invest in countries perceived as on their way up as the U.S.'s prospects fell.

Now that China is slowing down and commodities prices are falling for countries who depend on those exports, combined with a surge in U.S. stocks, investors have started scratching their heads, McCarthy writes. For all that doom and gloom, however, not everyone is down on emerging markets. McCarthy interviews Soumyanshu Bhattacharya, PM for JP Morgan [profile] Asset Management, which has seen institutional investors add money to portfolios buying debt valued in emerging market currencies.

To read more, click here.  

Edited by: Casey Quinlan


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