Total equity flows into emerging markets have buoyed
expectations of a pick-up in stock issuance by Latin American
companies in 2014, despite outflows last month from emerging
market equity funds.
Investors have continued adding to their equity allocations
even though global emerging market equity funds tracked by EPFR
saw $15.6 billion of outflows in 2013, $4.3 billion of which
exited in the two weeks to December 20, according to Barclays.
This followed a bumper year for equity sales in Latin
Data from eight major emerging markets indicated total net
foreign equity inflows of $23 billion between August and
December, the investment bank said. A high proportion of retail
investors in equity funds likely accounted for the trend
diverging from that of total flows, the investment bank
"We interpret the total equity flows and equity fund flow data
as meaning that retail-type foreign investor sales are being
met by net purchases from other foreign investors," said
"These could be private institutional, quasi-public, and
private wealth buyers whose actions are difficult to capture in
conventional fund flow data."
The analysis gave optimism after a busy year in the equity
markets in Latin America, although one with middling
performance: emerging market equity funds lost 1.77% of their
value in the year to December 19 — those focused on
Latin America lost 14.72%. Global small and mid-caps performed
better, gaining 25.6%.
However, persistent turbulence means that companies will need
to time their equity capital raises carefully, analysts
"We are heading into the fifth year of very volatile market
conditions. The window of opportunity for new issuers to hit
the market has been narrow," said Fabio Nazari, head of equity
capital markets at BTG Pactual. LF