The phenomenal gains enjoyed by Asian emerging market equities in recent years appears to be coming an end, a change that may dampen enthusiasm among U.S. investors and advisors once keen on emerging markets.
The latest evidence of a slowdown comes from Cerulli Associates, which reveals in a new report that Asia-Pacific long-term mutual funds managed to grow only 0.6 percent in July, rising to $2.146 trillion in assets under management (AUM) from $2.134 trillion. The September report, “The Cerulli Edge — Asian Monthly Product Trends Edition,” also shows exchange-traded funds under management declining to $142.4 billion from $143.2 billion, a -0.5 percent contraction.
“The engines of growth — Southeast Asian markets — saw weak gains in assets, with the largest being Singapore at only 1.7 percent, the report states. “Moreover, Asian currencies were generally weaker against the U.S. dollar, adding to losses.”
Cerulli has observed a deceleration in growth of Asian mutual funds and ETFs since March, when the two asset classes experienced AUM growth rates of 5.5 percent and 4.9 percent, respectively. Since then, AUM growth rates dipped to 2.0 percent (mutual funds) and 0.6 percent in April (ETFs), 2.6 percent and 0.04 percent in April, and 0.8 percent and (-1.8 percent) in June.