U.S.investors piled into emerging Asian exchange traded funds (ETFs) this week as the government shutdown moved into its third day.
According to trading firm IG, the Ishares MSCI Philippines Investable Index has rallied over 2 percent this week, while the corresponding Indonesian and Indian MSCI ETF indices jumped 1.5 percent and nearly 1 percent respectively. The MSCI Emerging Market index, meanwhile, has gained nearly 0.7 percent this week.
"Investors put aside the implications of the shutdown and bet on emerging Asian markets as they see the effect of [the shutdown] as contained," said Kelly Teoh, market strategist at IG's Singapore office.
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Washington was officially shut down for the first time in 17 years on Tuesday after Democrats and Republicans failed to reach an agreement on renewing the federal budget into the new year.
Markets have given a relatively muted reaction to news of the shutdown. On Wednesday, Wall Street closed slightly lower, while Japan's Nikkei 225 was trading flat by lunchtime in Asian trading on Thursday.
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According to Ross Teverson, investment director of global emerging markets at Standard Life Investments, concerns over the impact of the shutdown were not being felt in the emerging market region.
"I don't think the shutdown in the U.S. is really that significant for emerging markets. We've seen this before and it will be resolved," he said, adding that he doubted fears of another political stalemate over raising the debt ceiling would cause problems for the region.
"[The debt ceiling] could be a big deal, but I would expect that to be resolved as well... It's important for investors to look through the short-term noise and recognize that a lot of the concerns people have are already reflected in emerging market share prices," he added.