Non-resident investors have pulled a total of US$23 billion from emerging market portfolios since early October, a survey released on Tuesday showed, including US$18 billion since the US presidential election.
The move out of emerging market assets, largely accelerated by the surprise victory of Donald Trump in the November 8 presidential contest, has triggered a substantial reversal in fund flows, the Institute for International Finance reported. The outflows have triggered the longest continuous “reversal alert” since the organization began issuing the notice in 2005.
Of the US$18 billion in outflows since November 9, US$11.3 billion came from debt securities. The IIF said outflows from emerging markets have moderated recently.
While Trump’s victory was seen as a major factor in the reversal of funds to emerging markets, which had seen inflows in every quarter so far this year, it was not the sole motivation.
“Nearly half of total outflows over the period were from Indian equities and bonds, partly reflecting the tumultuous situation following the controversial demonetization initiative,” the IIF wrote in a statement. “We have also seen particularly marked outflows from South African and Thai securities, both dealing with domestic hurdles.”
Other catalysts for fund flight that the IIF highlighted were increasing uncertainty over Brexit, jitters about Chinese capital outflows, rising anticipation of a U.S. interest rate hike in December — something that did occur — and Trump’s pro-growth, reflation agenda and his stance on immigration and trade.
Korean equities were the only asset tracked by the IIF to have recorded inflows during the period, most of which came since the impeachment of President Park Geun-hye.
All eight of the countries tracked by the IIF had outflows in the seven days ending November 14. The organization tracks Indonesia, India, Korea, Thailand, the Philippines, South Africa, Brazil and Hungary.