Capital flows into emerging markets dropped sharply in August, according to new data from the Institute of International Finance (IIF).<\/p>\n
The IIF reports that portfolio investments in emerging markets came in at just US$9 billion in August, after average US$38 billion per month in the previous three months. Debt inflows were particularly affected, it says.<\/p>\n
“The dip in flows in August may mark a cyclical turning point for [emerging market] capital flows,” says Charles Collyns, the IIF’s chief economist.<\/p>\n
“Emerging market stocks and bonds have been among the best-performing assets so far this year amid a surge of foreign portfolio investment. While the usual seasonal lull surely contributed to the weakness, the sharp slowdown in portfolio flows in August could also mark the beginning of a period of greater caution among global investors towards EMs,” Collyns notes.<\/p>\n
The IIF reports that both equity and bond issuance slowed sharply in August. It says that August is usually a slow month, but this year bond issuance fell to $22 billion from a monthly average of $62 billion per month over the past year; and, that’s down from $44 billion last August. Equity issuance declined less severely to $42 billion, it notes.<\/p>\n
“Looking ahead, investors need to strike a careful balance between positioning for favourable long-term prospects in EMs relative to mature markets while managing the risk of a near-term correction, related to shifts in risk appetite and uncertainty around the path of the Fed’s exit from easy money,” Collyns adds<\/p>\n","protected":false},"excerpt":{"rendered":"
The sharp slowdown could mark the beginning of a period of greater caution among global investors<\/p>\n","protected":false},"author":38954,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2312,2313],"tags":[2507],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/310273"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/38954"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=310273"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/310273\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=310273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=310273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=310273"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=310273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}