Oct 5 (Reuters) – Emerging market portfolios saw another month of foreign capital outflows in September, the seventh of the past eight, as non-residents withdrew money from emerging market stocks and moved away of China, according to data from the Institute of International Finance. .
Chinese debt markets lost $1.4 billion in September for a total of $98.2 billion out of the asset class over eight months as investors feared a slowing economy.
Factory activity there barely increased in September, and a slowdown in service sector growth indicated further cooling as the economy grapples with COVID-19 curbs and slowing global demand. .
Join now for FREE unlimited access to Reuters.com
Chinese equity portfolios lost $0.7 billion last month. Year-to-date releases totaled $2.2 billion.
Emerging market equity portfolios outside China also saw outflows, with $8.2 billion exiting the asset class last month, while debt outside China saw inflows of $7.5 billion. dollars to stem some of the bleeding.
“The growing risk of a global recession weighs on emerging market flows as anxiety mounts over geopolitical events, realized inflation and uncertainty about policymakers’ ability to weather the current backdrop,” IIR economist Jonathan Fortun said in a report.
Overall, foreigners withdrew $2.9 billion from emerging market wallets 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 flow of $0.3 billion to Europe from emerging markets. All other regions posted exits.
Weakness in emerging market assets was expected this year as their developed counterparts broke away from years of ultra-low interest rates to combat what has at times turned into high inflation for decades. Higher rates of return in more stable economies divert money from emerging markets.
Russia’s invasion of Ukraine in February triggered a spike in food and energy prices that further hurt many emerging economies.
Join now for FREE unlimited access to Reuters.com
Reporting by Rodrigo Campos; edited by Jonathan Oatis
Our standards: The Thomson Reuters Trust Principles.