Investing.com — Emerging market (EM) funds saw significant outflows last week, continuing a tough December for these investments, according to JPMorgan’s weekly report.
According to JPMorgan’s latest EM Flows weekly report, bond funds recorded outflows of $1.5 billion, while equity funds saw an even larger outflow of $4.6 billion.
Bond outflows were led by hard currency funds, with outflows of $1 billion, up from $508 million the previous week. Local currency funds decreased by $480 million, down slightly from $496 million the previous week.
On the equity side, the surge in outflows was primarily driven by exchange-traded funds (ETFs), with net outflows of $3.1 billion (versus $262 million the previous week). Outflows from non-ETF equity funds fell by $1.5 billion.
Total outflows from emerging market bond funds since the beginning of the year have reached $28.2 billion, while emerging market equity funds have lost $30.3 billion. This year has been marked by volatility as investors balance risk sentiment with global macroeconomic challenges such as rising interest rates and geopolitical uncertainty.
Despite the overall weak trend, some bright spots were also noted. Foreign portfolio inflows into emerging market municipal bonds were positive, mainly from Indonesia, with net inflows of $584 million. However, foreign equity investment was less promising, with South Korea recording the largest outflow of $847 million.
The data reflects heightened caution among global investors, with sentiment heavily influenced by concerns about inflation, commodity price volatility and a slowing global economy. The report highlights that despite some markets showing resilience, emerging market assets remain vulnerable to external shocks.
