iShares, the Barclays-owned exchange traded fund provider, has seen investors’ appetite for the emerging markets decline as they move to ETFs offering exposure to European and international developed equities.  Over the past six weeks, iShares has seen inflows of over $3 billion into this class.

Andrea Morresi, head of sales for iShares Europe, said:  “The second quarter of 2008 has seen the market focus on the global slowdown and, indeed, for some countries, recession. The areas most affected are those that have had the strongest run beforehand, for example emerging markets such as China. 

“It is clear that emerging Asian economies have seen the brunt of this sell off.  For example, the equity markets in Vietnam are nearly down 60 per cent and China down 50 per cent from October 2007 - at the most extreme - but, in general, stronger falls than their developed counterparts.  The risk premium in the emerging economies, which plays out to an advantage in a bull market, is showing its other side in a downturn.  To that end, iShares clients have reflected this in their appetite for European and international developed equities and significantly less so for the emerging markets.”