Emerging market stock markets continue to "bleed", Vanguard ETF faces its longest "capital withdrawal" since the epidemic began

As of the beginning of this month, how severe is the panic selling in the global stock market? Until this Wednesday, investors were still withdrawing investments from the Vanguard Emerging Markets Stock ETF, with the ETF experiencing the longest period of continuous outflows since the outbreak of the COVID-19 pandemic, totaling $75 billion. By this Wednesday, the Vanguard FTSE Developed Markets Index Fund with the trading code VWO has seen net outflows for ten consecutive trading days, with investors withdrawing a total of $21.2 billion during this period. Apart from VWO, BlackRock's iShares funds investing in emerging market stocks also faced withdrawals. After the "Black Monday" crash earlier this week, emerging market stocks in developing countries saw their largest two-day rebound in nine months, but investor interest in these stocks has not yet recovered. Todd Sohn, ETF and technical strategist at Strategas Securities LLC, mentioned that the outflows from ETFs indicate that large buyers may be unwinding their positions in emerging markets. Sohn said: "Based on the continued outflows over the past week, it appears that large buyers holding VWO may be reducing their exposure. This typically means they are unwinding their positions in this asset class, perhaps not entirely, but at least reducing their allocation within their own asset mix." Media reports have pointed out that in the recent stock market turmoil, Asian stock markets have underperformed, partly due to concerns raised by investors about tech stocks such as TSMC, fearing that massive investments in artificial intelligence (AI) may not yield the expected returns. Wall Street CN previously mentioned that TSMC, the largest holding in VWO, saw its stock price plummet to a record low on Monday. The stock price of TSMC listed in Taipei fell nearly 9.8% on Monday, marking the largest single-day decline since its listing, dragging down Taiwan's weighted stock index by 8.4% on the same day, also setting a record for the highest single-day decline. However, on Monday, Morgan Stanley analysts still listed TSMC as their top pick, believing that the stock's valuation is attractive after recent weak performance. Charlie Chan, an analyst at Morgan Stanley, wrote in the report: "We are positive on TSMC's quality and defensiveness in the long-term semiconductor downturn." He also pointed out, "Confirmation of price increases and continued strength in AI capital expenditure should be key catalysts for TSMC." Chan expects that with price increases, "TSMC should achieve a gross margin of over 55% by 2025, and after achieving economies of scale in overseas wafer fabs, gradually approach a gross margin level close to 60% between 2028 and 2030." Adam Lin, an analyst at Moore Securities Investment Consulting, commented that from the drop in TSMC's stock price, investors on Monday hastily sold off without distinguishing, ignoring the company's strong fundamentals On Tuesday this week, TSMC's Taiwan stock rebounded strongly, closing up nearly 8%. It rose over 4.5% on Wednesday, but fell back on Thursday, closing down 2.6%. If it cannot reverse the downward trend on Friday, the week will still end with a cumulative decline. In sync with TSMC's fluctuations, the MSCI Emerging Markets Index fell 4.2% on Monday, rebounded 3.3% over the next two days, and fell again on Thursday, with the US stock market down by less than 0.3% at midday. This week, the index briefly broke through the 200-day moving average used to determine uptrend or downtrend and resistance levels, marking the first breakthrough in January. Meanwhile, analysts continue to raise the average expected profit for MSCI index component stocks over the next 12 months, marking the ninth consecutive week of increases, reaching the highest level in two years. In the options market, traders are less pessimistic about emerging market stocks than US stocks. On Monday this week, the spread between the emerging market and US implied volatility indicators on the Chicago Options Exchange hit its lowest level since March 2020