Foreign investment in emerging markets outside China comes to 'abrupt standstill'

China takes majority of foreign inflows

Foreign investment in emerging market stocks and bonds outside China has come to an “abrupt standstill” due to fears that many economies will not recover from the pandemic this year, according to a report by the Institute of International Finance.

In its latest capital flows tracker, the organisation estimates that emerging market securities attracted around $16.8bn in December 2021, but IIF believes the outlook is worsened by the Omicron variant and expectations of a stronger dollar and higher US interest rates. Podcast: 2022 outlook on Emerging Markets Jonathan Fortun, economist at the IIF, said: "On the other hand, we see flows into China sustaining the overall picture. The last quarter of the year has seen investors pumping money, particularly into China equities. This China and non-China EM split is rooted on the growth ou...