# China, equities weigh as EM sees another month of outflows – IIF
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-06
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Foreign Outflows Continue from Emerging Markets in September
Meta Description: Foreign investors continue to exit emerging market portfolios, with China particularly affected as global recession fears and geopolitical events weigh on
URL: https://financedigest.com/china-equities-weigh-as-em-sees-another-month-of-outflows-iifhtml

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By Rodrigo Campos

(Reuters) – Emerging market portfolios saw another month of foreign outflows in September, the seventh of the last eight, as non-residents pulled money out of EM stocks and away from China, data from the Institute of International Finance showed on Wednesday.

China debt markets lost $1.4 billion in September for a total of $98.2 billion pulled out of the asset class over eight months as investors shy away from a slowing economy.

Factory activity there barely grew in September, and a slowdown in services sector growth pointed to further cooling as the economy grapples with COVID-19 curbs and softening [global demand](https://www.financedigest.com/artificial-intelligence-goes-global-demand-for-ai-reaches-four-continents-in-three-months-new-figures-from-synechron-show.html "Artificial Intelligence goes global: demand for AI reaches four continents in three months, new figures from Synechron show").

[Chinese stock](https://www.financedigest.com/chatgpt-mania-pumps-up-chinese-ai-technology-stocks.html "ChatGPT mania pumps up Chinese AI technology stocks") portfolios shed $0.7 billion last month. The year-to-date [outflow stands at $2.2 billion](https://www.financedigest.com/french-asset-manager-amundi-posts-q3-outflows-of-13-billion.html "French asset manager Amundi posts Q3 outflows of  billion").

EM [stock portfolios outside China](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") also posted outflows, with $8.2 billion exiting the asset class last month, while ex-China debt saw inflows of $7.5 billion to stem some of the bleeding.

Mounting global recession [risk is weighing](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") on EM flows as anxiety builds over geopolitical events, realized inflation and uncertainty about the capacity of policymakers to weather the current context,” Jonathan Fortun, an IIF economist, said in a report.

On balance, [foreigners pulled $2.9 billion from emerging market](https://www.financedigest.com/golden-sunshine-and-golden-visas-draw-wealthy-foreigners-from-far-and-wide-to-portuguese-property-market.html "Golden sunshine and golden visas draw wealthy foreigners from far and wide to Portuguese property market") portfolios last month, for a year-to-date figure of $12.7 billion in outflows.

IIF data broken down by region showed an inflow of $2.4 billion to Latin America [last month](https://www.financedigest.com/fintech-trends-to-look-out-for-during-the-last-six-months-of-2019.html "Fintech trends to look out for during the last six months of 2019") and a $0.3 billion flow to EM Europe. All other regions posted outflows.

[Weakness in emerging market](https://www.financedigest.com/uk-housing-market-weakness-continues-improvement-on-the-horizon-rics.html "UK housing market weakness continues, improvement on the horizon – RICS") assets was expected this year as their developed counterparts broke with years of ultra-low interest rates to fight what has in cases become decades-high inflation. Higher rates of [return in more stable economies pull money away from emerging](https://www.financedigest.com/mallorca-emerges-as-this-years-summer-hotspot-as-british-buyers-return-to-spain-in-their-masses.html "MALLORCA EMERGES AS THIS YEAR’S SUMMER HOTSPOT AS BRITISH BUYERS RETURN TO SPAIN IN THEIR MASSES") markets.

Russia’s invasion of Ukraine in February triggered a spike in [food and energy prices](https://www.financedigest.com/world-food-prices-hit-record-high-in-2022.html "World food prices hit record high in 2022") that further hurt many EM economies.

(Reporting by Rodrigo Campos; editing by Jonathan Oatis)


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