The month of January saw a rebound in net non-resident portfolio flows to Emerging Market (EM). The EM securities attracted an estimated $51.1bn of foreign capital in January, the highest level in 12 months, according IIF’s Capital Flows Tracker.
Non-resident portfolio flows are a subsection of overall net capital flows, which include all types of flows covering portfolio flows, banking flows, direct investment, and other components of the financial account in a nation’s balance of payments.
With respect to debt flows, January saw $33bn in inflows, after a weak reading of $5.4bn in December. The stronger level of debt flows was mainly explained by inflows to EM Asia and Latin America ($12.6bn and $10.4bn, respectively), and also by positive figures in EM Europe ($4.3bn) and Africa & Middle East ($5.7bn). For equity flows, IIF’s headline tracker for January ended at $18bn. The reading for EM ex-China equity flows was $8.8bn, while China equity flows were $9.2bn.
IIF estimates that its broader measure of net capital flows to EM, including banking and FDI flows, came in at -$26bn in December.. Outflows from China continued ($37bn), but at a more moderate pace than in November ($39bn).
Net capital flows were cumulatively positive for the remainder of EM ($11bn). Argentina experienced solid inflows of $16bn in December. Overall, outflows from EM including China totaled $23bn in 2018, compared to a net inflow of $63bn in 2017. However, two consecutive months of inflows to EM ex-China paint a more optimistic picture going into 2019.
IIF’s daily EM Portfolio Flows database now includes equity flows for Qatar, Sri Lanka, and Pakistan, and debt flows for Poland. The daily estimates track closely official BoP data . In the case of IIF Monthly Capital Flows database, IIF expands its coverage to Colombia portfolio flows and Russia debt flows.
