Trade war flare-up spurs biggest EM outflows in seven months: IIF

Friday, 17 May 2019 00:00 - - {{hitsCtrl.values.hits}}

Investors look at computer screens showing stock information at a brokerage house in Shanghai, China - REUTERS

HONG KONG (Reuters): Emerging markets saw the heaviest capital flight since last October in recent weeks as trade tensions between China and the United States escalated, the Institute of International Finance (IIF) said in a report on Wednesday.

US President Donald Trump surprised global markets last week by hiking tariffs on Chinese goods in the midst of trade negotiations, saying China had backtracked on earlier commitments. Beijing retaliated on Monday.

The emerging market exodus was led by Chinese equities, which saw outflows of $1.5 billion on Monday, after investors took $2.5 billion off the table last week, according to the IIF.

Outflows from Taiwan hit $400 million on Wednesday, and other emerging Asian countries, such as South Korea, India and Indonesia, “have mirrored China’s trend, highlighting the risks to the broader EM complex from increased US-China trade tensions,” said IIF economists Jonathan Fortun and Greg Basile.

But bond inflows remained steady, with Thailand recording its highest daily inflows in nearly three months this week, at over $240 million.

IIF said recent outflows came to around $1 billion, largest since last October’s $1.1 billion.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.