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Capital Markets

Capital flows: Regional funds slip away

Equity funds struggle; Primary issuance muted

cumulative outflow from regional equity funds over nine weeks 

Latin American equity funds continue to struggle after their losing streak extended to 10 consecutive weeks, according to EPFR Global.

In the week ending March 25 there was $476 million of net outflow from regional equity funds, bringing the cumulative outflow during this period to more than $6 billion.

The trend has probably eliminated the chance of new issuance in Latin America’s equity capital markets in the near future in a year when many observers expected record volumes. In the past month only one deal, Brazil’s International Meal Company, has come to market. The transaction continued Brazil’s poor equity performance this year, pricing at the bottom of its range.

"It has been a while since we’ve seen such a convergence of fund-flow drivers," says Cameron Brandt, research director at EPFR Global. "In addition to the events in Japan, the Middle East and North Africa, you have longer-term themes such as the eurozone debt crisis and rising inflation still exerting an influence at a time when the impending US tax season and the quarterly rebalancing of big ETFs usually have an impact on some fund groups."

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