Hawkish Fed triggers emerging market outflows in September
TLT•Foreign investors pulled $26.3 billion from emerging market stocks and bonds in September, the first monthly outflow since June, as a hawkish Fed pushed yields and the dollar higher.
1. September outflows
Foreign investors withdrew $26.3 billion from emerging market stocks and bonds in September, including $7 billion from fixed income, the first monthly outflow from that sector since March. The Institute of International Finance said all regions recorded fixed-income outflows.
2. Equity withdrawals
Emerging market equities saw $19.2 billion in outflows, driven by heavy foreign selling of South Korean stocks. The IIF said the selling peaked after the KOSPI had risen 62% this year; the retreat also coincided with a cooling AI-driven technology rally.
3. Year-to-date flows
Foreign investors had put $246 billion into emerging market fixed income so far this year, while equity outflows reached $113.9 billion, compared with $27.3 billion over the same period last year. Excluding China, year-to-date equity outflows totaled $151.5 billion.
