Washington, D.C., August 27, 2015 — Volatile market conditions have taken a toll on capital flows to emerging markets, with net non-resident portfolio flows in August falling into negative territory for the first time in 2015, according to the Institute of International Finance’s latest EM Portfolio Flows Tracker. Outflows were estimated at $4.5 billion in August compared to inflows of $6.7 billion in July.

“Portfolio flows to emerging markets have retreated sharply in the last few weeks,” said Charles Collyns, chief economist at the IIF. “Emerging market investors have been spooked by rising uncertainty about China, and stress has been exacerbated by a combination of fundamental concerns about EM economic prospects and volatility in global financial markets.”

Emerging market equity flows fell to their lowest level since the 2013 taper tantrum at -$8.7 billion, while debt flows were estimated to have softened but remained positive at $4.2 billion in August. 

The IIF also issued a Flows Alert, highlighting a marked intensification of the retrenchment in EM portfolio flows in recent days. The alert was triggered on Monday, August 24. That day alone, the seven emerging markets that provide daily flows data experienced outflows of $2.7 billion, the same magnitude as on September 17, 2008 during the week of the Lehman Brothers bankruptcy.

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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 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.    

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Dylan Riddle

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Email: driddle@iif.com

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