LONDON: Portfolio managers ploughed $30.7 billion into emerging market stocks and bonds in December as monetary easing by major central banks and progress in Sino-US trade talks pushed investors to buy riskier assets, the Institute of International Finance said.
That took total flows to equities and debt in developing markets this year to $310bn, easily surpassing 2018 flows of $194bn when crises in Turkey and Argentina put some investors off, the IIF said.
However, 2019 still fell short of the $375bn emerging markets attracted in 2017.
In December, emerging market equities attracted healthy inflows of $12.9bn. Chinese stocks accounted for $10.1bn, meaning markets outside the world’s second largest economy attracted positive flows for the first time since July.
Emerging market equities jumped more than five per cent in December – the best monthly gain since January 2019 – lifted by signs Beijing and Washington were getting close to a Phase 1 trade deal, news that also sent Wall Street to record highs.
“Nevertheless, we remain cautious about the long-term strength of non-China equity flows due to positioning overhang and secular stagnation in EM,” IIF economist Jonathan Fortun wrote in a note to clients.
Emerging market debt, meanwhile, attracted $17.8bn in the last month of 2019, the IIF said.
Healthy flows to Latin American bonds helped boost the fixed-income total as flows to debt markets in emerging Europe stagnated and bond investors took money out of Africa, the Middle East and Asia.