Washington, D.C., May 19, 2015 - Emerging market portfolio flows have suffered a significant retrenchment since early May, according to the first issue of the IIF Flows Alert.
"EM outflows seem to have been triggered by the fallout from the global bond tantrum," said Charles Collyns, chief economist at the IIF. "Even though the impact on EM spreads has been fairly limited so far, our data shows that the jump in global market interest rates has spilled over into portfolio outflows from emerging markets."
IIF Flows Alerts are an early warning system that is based on daily portfolio flows to 7 EMs, including India, Indonesia, Korea, Thailand, South Africa, Brazil, and Hungary. Collectively, these countries suffered outflows of $3.2 billion in the first half of May. The reversal was broad-based, affecting all countries except Brazil.
The Flows Alert complements the IIF EM Portfolio Flows Tracke r, which provides monthly estimates of foreign portfolio flows to emerging markets. While the Tracker is issued around the same time every month, Flows Alerts are triggered when there is a major shift in portfolio flows to emerging markets.
"IIF Flows Alerts provide real-time notifications about turning points in EM capital flows," said Robin Koepke, an economist at the IIF and lead author of the report. "The alerts build on an innovative database of daily portfolio flows to emerging markets that will be updated weekly."
The IIF noted that daily portfolio flows data can help analysts monitor shifts in investor sentiment, understand the drivers of flows, and predict future changes in flows and asset prices. To learn more about the Flows Alert, go to: https://www.iif.com/publications/flows-alerts.
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. IIF members include 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.