NEW YORK, May 8 (Reuters) - Foreign investors funnelled
nearly $10 billion into emerging market portfolios in April,
with Asia taking the lion's share despite net outflows from
China, data from the Institute of International Finance shows.
Net inflows have now extended to four consecutive months,
the longest streak in over a year, although volumes are much
lower than in the first two months of the year, according to the
data released on Monday.
April saw $7.7 billion of net inflows to EM debt securities
and $2.1 billion to stocks. The combined $9.8 billion compares
to $9.1 billion in March and a $7.6 billion outflow in April
2022.
Flows to Asia were the strongest regionally at $5.2 billion,
even as China posted outflows of $1 billion in debt and $3.8
billion in stocks.
"China securities suffered outflows during April, as the
positive effect of the reopening fades away," said IIF economist
Jonathan Fortun in a statement.
Chinese debt has seen outflows in eight of the past 12
months, the data shows, while equities posted a monthly outflow
after five months of inflows.
April marked the second straight month that total inflows
have fallen below $10 billion after January saw a massive $68
billion cash pull toward EMs and February followed with $19
billion.
"For the coming months, we expect the level of inflows to
lower, mainly explained by a more cautious market due to renewed
market turmoil, low growth in G3 economies, and geopolitical
risk steaming from upcoming elections for a handful of EMs,"
Fortun wrote.
Turkey, which holds elections on Sunday, saw its fifth
consecutive month of outflows from equities while flows to debt
securities were positive for a third month running, according to
preliminary IIF data.
In a move closely watched by emerging market investors, the
U.S. Federal Reserve last week raised its benchmark interest
rate by a quarter of a percentage point to the 5.00%-5.25%
range.
But in a bullish signal to emerging markets, which can
benefit from lower rates in developed markets, the Fed stopped
saying it anticipates further rate increases will be needed.
Futures traders are pricing in a 25 basis-point Fed rate cut
as early as September and two by November according to the CME's
FedWatch tool.
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EM portfolios see inflows in April but China weighs EM portfolios see inflows in April but China weighs ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Rodrigo Campos; Editing by Susan Fenton)
