- Traders piled in to a popular emerging markets fund on Thursday as they bet on the phase-one trade deal boosting the sector's stocks, Bloomberg reported.
- Investors added $979 million into BlackRock's iShares MSCI Emerging Markets exchange-traded fund on January 2, the largest one-day inflow for the ETF since 2016.
- The influx arrived just hours before news broke that a US airstrike killed a top Iranian general and ratcheted up tensions between the two countries.
- Emerging-markets firms are particularly exposed to trade war developments, as the nations they operate in often have less policy leverage to counteract tariff escalations.
- Watch EEM trade live here.
Traders rushed into a popular emerging markets fund on Thursday, betting that the upcoming US-China trade agreement will boost the sector's stocks, Bloomberg reported.
Investors piled $979 million into BlackRock's iShares MSCI Emerging Markets exchange-traded fund on January 2, the biggest one-day inflow for the ETF since 2016, according to Bloomberg data.
The addition arrived just hours before news broke that a US airstrike ordered by President Trump killed a top Iranian general and ratcheted up tensions between the two nations. The assassination dragged global stocks lower and boosted safe-haven assets like gold as traders fled market volatility.
The ETF, which trades under the ticker EEM, fell as much as 1.8% Friday. The fund surged about 2.1% on Thursday, pushed higher by the record investor interest.
Traders are encouraged that the preliminary deal will remove trade-war hurdles for emerging market stocks. Trump recently announced that the deal would be signed at the White House on January 15 and that he would later travel to Beijing to discuss a follow-up agreement.
"Confidence is growing," Mohit Bajaj, director of ETFs for WallachBeth Capital, told Bloomberg. "We are seeing optimism in China from trade deal anticipation."
Investors fled emerging-market stocks throughout the second half of 2019, as trade war escalations promised to roil the sector and accusations of currency manipulation in China brought new stakes to the conflict. Developing nations with less leverage in trade negotiations were particularly exposed to the trade war, and emerging-market equities typically surged when news of a trade agreement broke.
"If you also look at times when it feels that trade may be resolved, or trade issues may be improved, you notice how sharply emerging markets rally," Rashmi Gupta, a money manager at JPMorgan Chase Bank in New York, told Markets Insider in June.
The ETF traded at $44.99 as of 3:35 p.m. ET Friday.
Now read more markets coverage from Markets Insider and Business Insider:
'Likely just the beginning': Here's what 6 experts are saying about what Trump's deadly Iran strike means for already shaken markets
Trump's tariffs are driving job losses and production cost hikes, the Fed says
In 2019, activists and stock-pickers were hot - but Ray Dalio made a rare stumble and short-sellers got crushed
Next Story
I quit McKinsey after 1.5 years. I was making over $200k but my mental health was shattered.
Some Tesla factory workers realized they were laid off when security scanned their badges and sent them back on shuttles, sources say
I tutor the children of some of Dubai's richest people. One of them paid me $3,000 to do his homework.
Why are so many elite coaches moving to Western countries?
Global GDP to face a 19% decline by 2050 due to climate change, study projects
5 things to keep in mind before taking a personal loan
Markets face heavy fluctuations; settle lower taking downtrend to 4th day
Move over Bollywood, audio shows are starting to enter the coveted ‘100 Crores Club’
