BAML: Don't Judge Emerging Markets Based on Capital Outflows

Net capital outflows from emerging markets currently correlate to those seen during the global financial crisis and are worse than the taper tantrum, a research report from Bank of America Merrill Lynch says, but don’t worry about it to the same degree. The market environment is now “much more benign” and looking at capital flows to help forecast future returns may no longer be appropriate.

BAML: Recent emerging market fund outflow headlines don’t tell the whole story

The report, titled “The Flow Puzzle,” says the strategy should be to focus on Fed policy, the plight of the U.S. dollar and global interest rates.

Market participants have been focusing on the...