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Soaring gold prices
and a slumping dollar prompted investors to step up the pace of their
diversification strategies in early Nov. according to EPFR fund
trackers of Cambridge MA. Strong inflows went into emerging markets
equity funds, global equity funds, commodity funds, energy sector
funds and global bond funds during the week to Nov. 11.

concerns about the weakness of the dollar, which led to moves
overseas, flows into US Equity Funds hit a 47-week high because of
investor optimism after recent earnings reports and the expectation
that US interest rates will stay at low into 2010. Redemptions from
Money Market Funds totaled $7.1 bn for the week, taking year-to-date
outflows over the $450 bn level.

being viewed as a haven from dollar weakness, emerging markets gained
from robust Chinese macroeconomic data showing GDP growth likely to
exceed 10% during the current quarter. Emerging markets equity fund
inflows hit $1.48 bn in the week mostly to Asia. Country fund groups
investing in Brazil, Russia, India, and China gathered in a 9-wk high
$256 mn, more than half of it to China funds.

“In addition to
providing some cover from the dollar’s anticipated trajectory,
emerging markets are again offering a modest reform story,” noted
EPFR Global Senior Analyst Cameron Brandt. “India and Russia have
recently joined the ranks of those making at least a rhetorical
commitment to economic reform” alongside Malaysia, Nigeria, and
Indonesia .

high US unemployment, investors committed $6.97 bn to US equity
funds, their best showing since the second week of December, 2008.

optimism about the US should be good news for Japanese exporters,
investors had other worries including a yen trading below 90 to the
dollar and a surge in yields on Japanese debt that could put
additional pressure on public finances. Japan equity funds posted
outflows for the 8
straight week. But the total outflows year to date are only $5.1 bn
which means Japan is ahead of 2007 and 2008. .

into Europe equity funds bounced back from the previous week, but
remain subdued as investors question how strong any recovery will be
in 2010 given the competitive burdens created by strong regional
currencies and the drag on domestic demand exerted by high
unemployment levels. Europe fund inflows year to date are $923 mn
which is also the best since 2006.

Vivian now adds: China is under pressure by finance ministers Asian Pacific Economic Cooperation Forum, meeting in Singapore, to switch to “market-oriented exchange rates”. That means the renminbi should be allowed to float up against the dollar.

While it is hard for western industrial countries to get China to change its policy of fixing the RMB to the Greenback, China is anxious to cooperate with its Asian neighbors.

China’s CB may in fact let the currency appreciate. It promised the Forum that it will keep the currency stable against major currencies not just the declining US one.

Ghitis and Vivian report on our companies for paid subscribers below. Vivian first with a fund note and then Frida some bad news and some good and then Vivian again:


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