China’s reopening stokes ‘positive shift’ in sentiment, as emerging markets see largest inflows for 2 years
- Emerging market securities attracted around US$65.7 billion in January, the highest total since January 2021
- Foreign funds snapped up US$17.6 billion of Chinese equities, the largest inflow since December 2020
Emerging market equities and debt attracted the largest monthly net inflows in January for two years, with a significant amount of funds flowing into Chinese stocks, said the Institute of International Finance (IIF), with valuations bolstered by a weakening US dollar.
The US-based IIF estimated that emerging market securities attracted around US$65.7 billion last month, the highest total since January 2021.
“The impressive level of flows in January 2023 is mainly explained by a strong rebound in emerging markets excluding China debt and to a lesser extent Chinese equities,” the IIF said in a monthly research note on global fund flows released on Wednesday.
“The apparent slowdown in [developed market] interest rate hiking and a more favourable outlook have allowed some [emerging markets] to go back to issue fresh debt in the market.”
January’s net inflows were higher than the US$30.9 billion recorded for all of last year, according to IIF data.