China, equities weigh as EM sees another month of outflows - IIF
Reuters
Published Oct 05, 2022 16:09
By Rodrigo Campos
(Reuters) - Emerging market portfolios saw another month of foreign outflows in September, the seventh of the last eight, as non-residents pulled money out of EM stocks and away from China, data from the Institute of International Finance showed on Wednesday.
China debt markets lost $1.4 billion in September for a total of $98.2 billion pulled out of the asset class over eight months as investors shy away from a slowing economy.
Factory activity there barely grew in September, and a slowdown in services sector growth pointed to further cooling as the economy grapples with COVID-19 curbs and softening global demand.
Chinese stock portfolios shed $0.7 billion last month. The year-to-date outflow stands at $2.2 billion.
EM stock portfolios outside China also posted outflows, with $8.2 billion exiting the asset class last month, while ex-China debt saw inflows of $7.5 billion to stem some of the bleeding.
"Mounting global recession risk is weighing on EM flows as anxiety builds over geopolitical events, realized inflation and uncertainty about the capacity of policymakers to weather the current context," Jonathan Fortun, an IIF economist, said in a report.
On balance, foreigners pulled $2.9 billion from emerging market portfolios last month, for a year-to-date figure of $12.7 billion in outflows.
IIF data broken down by region showed an inflow of $2.4 billion to Latin America last month and a $0.3 billion flow to EM Europe. All other regions posted outflows.
Weakness in emerging market assets was expected this year as their developed counterparts broke with years of ultra-low interest rates to fight what has in cases become decades-high inflation. Higher rates of return in more stable economies pull money away from emerging markets.
Russia's invasion of Ukraine in February triggered a spike in food and energy prices that further hurt many EM economies.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.