Foreigners withdraw money from emerging markets for 3rd straight month in May, says IIF

Foreign funds exited emerging market portfolios for the third straight month in May, data from the Institute of International Finance (IIF) showed on Tuesday, matching a three-month streak of withdrawals that ended in February 2016.

Non-resident portfolios registered a net outflow of US$ 4.9 billion (R$ 23.4 billion) last month, compared to a withdrawal of US$ 4.5 billion (R$ 21.5 billion) in April and inflow of US$ 22.8 billion (R$ 109 billion) in May 2021.

The negative balance for the last three months was US$ 17.3 billion (R$ 87.2 billion), according to IIF data.

China registered a net inflow of US$ 4.7 billion (R$ 22.4 billion), with US$ 2 billion (R$ 9.5 billion) directed to debt and US$ 2.7 billion (R$ 12.9 billion) billion) going to equities, but the data still shows year-to-date deficit for the Asian country.

Outflows of equities from emerging markets excluding China accounted for the majority of net losses in May.

“Increasing global recession risk is weighing on emerging market flows as anxiety mounts over geopolitical events, tighter monetary conditions, inflation and fears that greater risks are piling up,” said Jonathan Fortun, economist at the IIF, in a statement.

Emerging markets excluding China saw net losses of US$9.6 billion (R$45 billion), with US$6.1 billion (R$29.1 billion) coming from equities, according to the IIF.