Emerging market portfolio inflows weakened to $6.7 billion in July from $11.3 billion in June, according to the latest EM Portfolio Flows Tracker by the Institute of International Finance.
“EM portfolio flows have been subdued in recent weeks,” said Robin Koepke, an economist at the IIF and lead author of the report. “Investors seem to be in a ‘wait-and-see’ mode amidst concerns about Chinese equity market volatility and continued uncertainty regarding Fed liftoff and Greece.”
The IIF noted that EM equity inflows slowed to a year-to-date low of $1.6 billion in July, while debt flows remained subdued at $5.1 billion. EM Asia saw its weakest inflows of the year as concerns about China held back flows to other markets in the region (Chart 1).
Due to data limitations, portfolio flows to China are not included in the estimation of the Tracker, but a new proxy for foreign purchases of Chinese stocks published by the PBOC indicates significant retrenchment in June (Chart 2).
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.