Hopes high for share sales in 2014 despite fund outflows

After the busiest year for Latin American equity sales since 2010, some are optimistic about the year ahead. Despite outflows of $4.3bn in global EM equity funds tracked by EPFR in the two weeks to December 20 — and $15.6bn of outflows over the year — other investors have continued adding to their allocations, according to analysts at Barclays. Data from eight major emerging markets indicates total net foreign equity inflows of $23bn between August and December, a divergence likely attributable to the high proportion of retail accounts in the fund flow data, the investment bank says. “We interpret the total equity flows and equity fund flow data as meaning that retail-type foreign investor sales are being met by net purchases from other foreign investors,” says Barclays. “These could be private institutional, quasi-public, and private wealth buyers whose actions are difficult to capture in conventional fund flow data.” The analysis gives optimism after a busy year in the equity markets in Latin America, although one with middling performance: EM equity funds lost 1.77% of their value in the year to December 19 — those focused on LatAm lost 14.72%. Global small and mid-caps performed better, gaining 25.6%. “We are heading into the fifth year of very volatile market conditions. The window of opportunity for new issuers to hit the market has been narrow,” Fabio Nazari, head of ECM at BTG Pactual, tells LatinFianance. While these windows will test issuers from all regions, the particular challenges facing Brazil could offer opportunities for Mexican or Andean companies to raise capital. Companies from the region raised $33.93bn in 2013 through December 20, according to Dealogic, the most stock sold since 2010. The volume comes from 79 transactions, and is up from the $24.18bn raised in 2012 from 71 deals. Itau appeared to squeak in to the lead among bookrunners as of December 20, with $3.66bn. BTG Pactual was second with $3.46bn and Credit Suisse third with $3.4bn. BB S