Volume Picks Up as Interest in Foreign Stocks Build

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Is volume picking up again? Traders are hoping so.

For the second straight day yesterday, NYSE consolidated tape volume exceeded 5 billion shares. Wednesday saw 5.4 billion shares changing hands, while 5.5 billion shares were traded yesterday—the most since July 16. That’s about a 37% increase from the 4 billion shares the NYSE has averaged over the past several weeks. It was also the first time since early July (6th & 7th) that traders saw back-to-back days of over 5 billion shares.

But with U.S. equity mutual funds continuing to see outflows, what’s behind this recent move up in trading activity? Charles Biderman of TrimTabs cites heightened interest in foreign stocks. He points out that global equity ETFs have continued to see strong inflows, posting $4+ billion of monthly inflows for 4 consecutive months. But in a more encouraging sign, global equity mutual funds are now also seeing a pickup in inflows too, evident in their 6 straight weeks of inflows.

Reinforcing that trend, over the last few days, money has noticeably continued to flow INTO global equity mutual funds even as U.S. equity mutual funds still saw modest OUTFLOWS. All of this comes as a number of global indices like Germany, U.K., Canada, Brazil, Mexico, Korea, Singapore, and India hover at or lurk near new highs.

So how much interest have global stocks attracted recently? Lots—just take a look at some of these emerging market ETFs lately.

a) The iShares MSCI Emerging Market Index Fund and Vanguard Emerging Markets have become the 3rd and 4th biggest ETFs in the market, respectively—behind only the SPDR S&P 500 and SPDR Gold Trust .

b) The VWO has 30% more volume than normal over the past 2 days, while the EEM saw a 23% rise in trading activity on Wednesday. Both are on pace for above-average volumes today too.

c) Both emerging market ETFs have seen double-digit growth in assets since August (up 21% for EEM and up 31% for VWO).

d) Furthermore, interest from the trading/investment community has been particularly strong. According to the National Stock Exchange, the VWO has seen over $13 billion in inflows this year (the most of any ETF) while the EEM has seen a very respectable $2.8 billion in inflows this year (3rd best in the ETF marketplace).

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