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Emerging Market Outflows Are Biggest Since 2016 U.S. Election

Here’s a warning sign for Asia’s central banks.

Investors have started pulling out of emerging markets with the biggest slump in portfolio flows since the 2016 U.S. presidential election, according to analysts at the Institute of International Finance.

Asia has taken the brunt of the reversal with South Korea, Indonesia and Thailand seeing the biggest outflows of the countries in the study. Those withdrawals have been concentrated in equities, while bonds have been hit less hard. India is bucking the trend with continued demand for both stocks and bonds.

IIF analysts say the countries they are tracking registered nearly $4 billion in outflows since flows turned negative on Jan. 30. Some $3.4 billion of that has been from equities.

“While we remain generally optimistic on EM flows this year, downside risks should not be understated,” IIF analysts led by Fiona Nguyen wrote in a note. “A sustained global equity market sell off would clearly be one such downside risk.”

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