2023-06-09 19:55:38
© Reuters. Dollar notes 03/11/2009 REUTERS/Rick Wilking
Por Libby George
LONDON (Reuters) – Foreign investment in fixed income and Asian equities boosted flows into emerging market portfolios to $10.4 billion in May, offsetting Chinese bonds that suffered a third straight month of outflows, the Institute of International Finance says. (IIF).
The fifth straight month of positive cash flows from foreign investors to emerging markets came despite a $7.2 billion outflow of Chinese debt and a small $100 million inflow into the country’s equities, the IIF found. .
Over the past year, foreign investors have withdrawn about US$59 billion from Chinese debt, although the country’s stocks have seen inflows of US$33.7 billion over the same period.
“While our data paints a generally positive picture, this is the fifth straight month of Chinese debt outflows and only marginal flows into Chinese equities,” IIF economist Jonathan Fortun wrote in a note.
In total, investors put up $6.9 billion in emerging market equities and $3.5 billion in debt.
The numbers, although positive, failed again to sustain the optimism of the beginning of this year, when inflows reached the highest level in two years with the post-pandemic reopening of China and the hope that a global cycle of interest rate hikes was on its way. on pause.
Most of the cash received, a total of $16.4 billion, went to emerging markets in Asia, with stocks in India, Taiwan and Korea attracting big investments.
Investors withdrew a total of €5.8 billion from emerging markets in Africa and the Middle East. Outflows from South Africa, which has grappled with power cuts and weakening local investor confidence, were $562 million in equity and $816 million in debt.
“Moving forward, we see seasonal patterns in emerging dollar debt becoming progressively weaker in the coming months, as tight liquidity has historically discouraged lenders from adding exposure before the final quarter of the year,” Fortun wrote.
“Thus, we expect a drop in the level of tickets, explained mainly by a more cautious market.”
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