Inflow in emerging markets ETF has been higher during the QE periods.
Higher liquidity raises the chance of more money entering the country.
European and American markets were euphoric after European Central Bank (ECB) President Mario Draghi announced a better than expected quantitative easing (QE) program. Market expectation was that Draghi would announce a euro 50 bn per month QE program which would run for a year totalling between euro 600-700 billion.
But Draghi surprised the market by not only announcing a QE package of
euro 60 bn but also increased the tenure to September 2016 taking the
total above one trillion euros. Moreover, Draghi has kept the option
open ended till a ‘sustained adjustment to the path of inflation’ has
been achieved. Analysts expect this QE to last much longer than
September 2016.
Markets across asset class reacted to the news. While equity markets
have moved higher, euro currency has touched a new 11 year low against
the dollar. Oil prices
were hit by a double whammy; first was the 80 year high oil inventory
level in the USA and second was the QE which made the dollar stronger and since it has a strong negative correlation with oil, it made it weaker.
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