Emerging market (EM) debt and equities suffered an outflow of $9.8 billion from foreign portfolio investors in March 2022. This was the first net outflow month since March 2021, according to the Institute of International Finance (IIF).
“We see investors with higher risk sensitivity as anxiety builds over geopolitical events, tighter monetary conditions, rising inflation, and fears that many economies will not recover quickly enough from the pandemic. Overall, the first quarter of the year has seen investors being more selective,” said IIF.
China’s debt and equity market accounted for the bulk of the outflows, while flows into other EMs remained positive. China bonds witnessed outflows of $11.2 billion and equities another $6.3 billion. Non-China EM debt attracted $8.2 billion and equities saw marginal outflows of $400 million. IIF has termed this as an ‘unprecedented dynamic’, indicative of market rotation.