EM STOCK PORTFOLIOS MONTHLY FOREIGN OUTFLOW LARGEST SINCE MARCH 2020 -IIF
By Rodrigo Campos
Nov 15 (Reuters) -Foreign investors sold out of emerging market stocks in October by the most since the COVID market selloff in early 2020, but inflows to EM bonds and debt more than offset the outflow, data from a banking trade group showed on Friday.
The October monthly net total inflow of $1.9 billion compares with a $56.4 billion inflow in September and an $8.1 billion outflow in October 2023.
Stock portfolios saw a $25.5 billion outflow, the largest since March 2020, while bonds attracted $27.4 billion.
Chinese equities alone shed $9 billion while China bonds pulled in $1.4 billion, despite a renewed stimulus push from the government in late September. A fresh November stimulus announcement also fell short of expectations.
"Despite targeted easing measures by the Chinese government, investor confidence remains low," IIF economist Jonathan Fortun said in a statement.
"These dynamics have driven substantial market shifts, where growth concerns and regulatory uncertainty continue to deter foreign investment in China."
As markets were setting up for the U.S. presidential election in early November, late October saw a move toward trades that would benefit if Donald Trump returned to the White House - driving up the dollar and U.S. rates.
"Concerns over the dollar's strength relative to EM currencies have amplified risk aversion in equity markets," Fortun said.
"This shift aligns with the expectation that yield differentials and rate trajectories may increasingly favor EM debt over equities as risk aversion rises globally."
Regionally, last month Asia saw a net $6.8 billion outflow, while Emerging Europe received $5.2 billion and Latam $3.6 billion. Flows to Africa were marginally negative.
Year-to-date, foreigners have poured about $249 billion net into their emerging market portfolios. Some $220 billion has gone to debt, $169 billion of which went outside of China.
EM portfolios see $30.9 billion inflow in August https://reut.rs/4dccvkC
Reporting by Rodrigo Campos; Editing by Chizu Nomiyama
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
