Emerg­ing mar­ket March in­flows rise to 21-month highs: IIF

The Pak Banker - - COMPANIES/BOSS -

For­eign­ers are es­ti­mated to have pumped $36.8 bil­lion into emerg­ing mar­ket stocks and bonds in March, the highest monthly in­flow in nearly two years, the In­sti­tute of In­ter­na­tional Finance said on Tues­day. The Wash­ing­ton-based body, one of the most au­thor­i­ta­tive track­ers of for­eign cap­i­tal flows to and from the de­vel­op­ing world, said in a note that all four emerg­ing mar­ket re­gions had re­ceived in­flows, with Asia top­ping the list with $20.6 bil­lion.

The in­flow, the highest since June 2014, fol­lows $5.4 bil­lion re­ceived in Fe­bru­ary and is sub­stan­tially above the 2010-2014 av­er­age of $22 bil­lion, the IIF said. Bonds took in $18.9 bil­lion and eq­ui­ties $17.9 bil­lion, the data showed.

Latin Amer­ica, which had been shunned by in­vestors in re­cent months, took in $13.4 bil­lion, the data showed, with eq­ui­ties in cri­sis-hit Brazil re­ceiv­ing over $2 bil­lion "helped by at­trac­tive val­u­a­tions and ris­ing hopes for po­lit­i­cal change".

But the in­flow surge may have ground to a halt, the group said, pre­dict­ing that go­ing could get tougher in com­ing weeks as ex­pec­ta­tions again grow for the U.S. Fed­eral Re­serve to raise in­ter­est rates a cou­ple of times in 2016. "In the ab­sence of much im­prove­ment in the fun­da­men­tal eco­nomic outlook for EMs, it ap­pears that March's surge in flows to EMs was mainly due to a global risk-on shift in in­vestor be­hav­iour and lower ma­ture mar­ket in­ter­est rates, sup­ported by sur­pris­ingly dovish sig­nals from the (Fed) on March 16," the note said.

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