China, emerging markets suffering worst capital exodus in 7 years with US$4 billion net outflow in June
- Net total of US$4 billion withdrawn from emerging markets’ equities and bonds combined in June, the Washington-based Institute of International Finance (IIF) said
- China’s foreign exchange reserves also fell by a more than expected US$56.5 billion from a month earlier to US$3.07 trillion at the end of June
China and over 20 other emerging markets are undergoing their worst wave of capital exodus in around seven years, a global financial industry association has warned.
Overseas investors withdrew US$2.5 billion net from Chinese bonds in June, according to data from the Institute of International Finance (IIF), while US$9.1 billion net flowed into other emerging markets’ bonds last month.
But a net total of US$4 billion was withdrawn from emerging markets’ equities and bonds combined in June, marking the fourth straight month of net losses, the Washington-based IFF said.
Overseas investors still deposited US$9.1 billion into China’s equities in June, compared with outflows of US$19.6 billion in other emerging markets, the IIF added.
We see that the current outflow episode is similar in scale to the [yuan] devaluation scare in 2015 and 2016
“We see that the current outflow episode is similar in scale to the [yuan] devaluation scare in 2015 and 2016,” IIF economist Jonathan Fortun wrote on Wednesday after China suffered a huge foreign capital outflow from its securities markets in 2015, when around US$670 billion was withdrawn.