Emerging Market Fund Flows Fall Most Since “Taper Tantrum” In June 2013: IIF

Investors withdrew $11.5 billion out of emerging markets in December, the sharpest retrenchment since the “Taper Tantrum” in June 2013, according to the Institute of International Finance’s (IIF) latest EM Portfolio Flows Tracker.

“December was by far the weakest month for EM portfolio flows this year,” said Robin Koepke, an economist at the IIF and lead author of the report. “Investor sentiment towards emerging markets appears to have taken a significant turn for the worse in the last few weeks. The weakness in flows is likely to reflect a general increase in risk aversion in the context of the Russian currency crisis and the remarkable decline in oil prices.”

Emerging markets saw debt outflows of -$7.8 billion and equity outflows of -$3.7 billion in December, compared with debt and equity inflows of $13.1 billion and $10.7 billion, respectively, in November.

Flows reversed in all emerging market regions except Asia, where inflows were supported by foreign purchases of Indian bonds and strong equity issuance across the region.

Read the full report from the Institute of International Finance (IIF): EM Portfolio Flows Tracker for December 2014 (PDF)

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. IIF members include 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.