Investors Flee Emerging Markets At Fastest Pace Since The Height Of Global Financial Crisis

Investors are fleeing emerging markets at the fastest pace seen since the height of the global financial crisis, according to the IIF.

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Chart courtesy of the Institute of International Finance

Investors are fleeing emerging markets (EMs) at the fastest pace seen since the height of the global financial crisis as $40 billion in assets from EMs was pulled in the third quarter, according to a report released on Tuesday from the Institute of International Finance (IIF).

Outflows from emerging markets in the third quarter was the first quarterly outflow since 2009 and was the largest seen since the final three months of 2008, when investors had sold off $105 billion in assets, according to the IIF report.

The sharp quarterly drop of flows into emerging markets comes amid market turmoil driven by a slowdown in economic growth from China — in addition to devaluations of the Chinese yuan, falling oil prices and commodity prices, and concerns as the U.S. Federal Reserve moved closer to a hike in its near-zero interest rates that have supported the demand for riskier assets in EMs.

Around $19 billion in equities and $21 billion in debt was sold from EMs in the third quarter, according to the IIF report.

The benchmark MSCI Emerging Markets gauge has fallen 20 percent in the past three months and is poised for its biggest retreat in four years.