Washington, D.C., April 29, 2015 - Portfolio flows to emerging markets picked up to $35 billion in April, making the strongest inflows since June 2014, according the latest EM Portfolio Flows Tracker by the Institute of International Finance.
"EM portfolio flows have gained momentum in recent months,"' said Robin Koepke, an economist at the IIF and lead author of the report. "Strong inflows in April seem to reflect dovish signals from the Fed that have reduced market expectations of rate hikes. We are concerned that flows may well continue to be volatile in the months ahead in the face of further shifts in market expectations about the timing and pace of Fed liftoff, especially if there is evidence of tightening U.S. labor markets."
The IIF noted that EM equity markets saw inflows of $21 billion, the highest levels since October 2010. On a regional basis, Emerging Asia and Latin America led the rebound, with particularly strong inflows to Korea, India, Brazil, and Mexico.
The IIF noted that greater inflows seem to have been driven by improving risk appetite and investor perceptions of a reduced likelihood of near-term Fed policy interest rate hikes.
The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership the IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.