Catenaa, Friday, March 14, 2025- Emerging markets has seen a net foreign inflow of about nearly $16 billion in February, Institute of International Finance (IIF) said on Thursday, as investors rally around Chinese equities and debt.
Data by IIF said that Chinese stocks sucked in $11.2 billion, but selling elsewhere meant emerging market equity portfolios saw a net outflow of $2.1 billion last month.
The picture was the reverse in fixed income, where Chinese bonds posted a $15.1 billion outflow even as emerging market debt elsewhere raked in $33.2 billion.
The overall $15.9 billion net inflow to emerging market portfolios last month compares with $21.2 billion in January and $27.8 billion in February 2024.
The February inflow to Chinese equities was the largest in 4 months September and the second largest after 2023.
The decoupling of Chinese stocks from the rest of emerging markets was evident in the February data, Jonathan Fortun, Senior Economist at the IIF said.
“However, caution around regulatory risks and geopolitical uncertainty remained evident,” he added.
A year-long rally in Chinese stocks has come to the fore in recent weeks as investors, eager to ditch Wall Street, bet on emerging market stocks from Beijing and beyond.
The MSCI Chinese equity benchmark has rallied 40% over the past 12 months. However, year-to-date it is Colombia and Poland who are leading the gains in dollar-terms, boosted by their strengthening currencies.
Despite having recently touched its highest in three years, the MSCI China index remains more than 40% below its 2021 peak.
In its regional breakdown, the IIF report showed Latin America was the region with by far the largest inflows last month, funneling $10.7 billion between equities and debt.
Emerging Europe pulled in $4 billion and Asia $2.6 billion, while Africa and the Middle East saw a net outflow of $1.4 billion.
