New York. Non-residents pumped $36.5 billion into their emerging market equity and debt portfolios in July, data from a banking group showed on Thursday, the biggest inflows since January.
The Institute of International Finance (IIF) also noted that expectations of lower interest rates in the United States further improved the outlook for emerging market assets.
Debt issuance accounted for the bulk of net inflows into emerging market portfolios last month, totaling $29.4 billion, according to IIF data. Another $7.1 billion went into equity portfolios.
The combined total is more than double June’s inflow of $17.2 billion and $4.6 billion above July 2023.
“The driving force behind the strong performance of debt this month has been new debt issuance, led by South Korea, Turkey and Mexico,” said Jonathan Fortun, an economist at the IIF, in a statement.
He said the contraction in carry trades likely weighed on local currency debt performance as the Japanese yen, a key funding currency, rallied.
However, the prospect of lower U.S. yields is a boon for emerging market assets, according to Fortun.
Revised IIF data showed a small net outflow in April, leaving July as the eighth month of inflows since November.
Chinese portfolios saw an outflow of $4.7 billion in July, of which $900 million was in equities and $3.8 billion in debt. Still, Asia led the region with a net inflow of $21 billion.
Emerging Europe, Africa and the Middle East, and Latin America recorded inflows of USD 6.2 billion, USD 5.3 billion, and USD 4 billion, respectively.
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– 2024-08-17 08:35:07
