Emerging stock, bond markets saw $ 3.5 b outflow in Nov: IIF

Reuters: Emerging equity and bond markets suffered $3.5 billion in outflows in November, with capital exodus resuming after the previous month’s brief respite, data from the Institute of International Finance (IIF) showed.

The Washington-based group, one of the most authoritative sources of data on investment flows to the developing world, said in a report released late on Tuesday that retrenchment from emerging stocks last month amounted to $2.9 billion while bonds had lost $0.6 billion.

That means emerging markets have seen investor flight in four of the past five months, with the third 2015 quarter the worst in terms of flows since 2008. While October saw inflows of $13.9 billion, the IIF said that strong U.S. jobs data at the end of that month had convinced investors the Federal Reserve would start raising U.S. interest rates in December.

“The market-implied probability of a December rate hike jumped from 35% in late October to over 75% in late November. This sharp rise in expectations for a December rate hike seems to have been a catalyst for a further retrenchment from EMs,” IIF said.

The group said earlier this year that emerging markets would suffer net capital ouflows in 2015 for the first time since 1988, due to a drying up of inbound investment and capital flight from residents.