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Foreign Investors Dumped Stocks in India, Indonesia in April: IIF

After five months of inflows, foreign investment in emerging markets fell in April, according to the Institute of International Finance


Bombay Stock Exchange
Foreign money outflows from stocks in India and Indonesia led outflows from emerging markets in April, a banking trade group has said. This file Reuters image shows the Bombay Stock Exchange.

 

Foreign investors withdrew money in April from emerging market portfolios such as stocks in India and Indonesia, banking data shows.

The Institute of International Finance data revealed the first monthly outflow since October, with net non-resident portfolio outflows of -$0.7 billion.

The withdrawals came amid concerns of a tighter monetary policy path in the US, the group said.

 

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The figure compares with net inflows of $30.2 billion in March and a $16.3 billion inflow in April 2023, the IIF data show.

Flows out of ex-China stock portfolios were the main culprit for the overall negative flow, with $3.8 billion leaving the regional asset class. Ex-China debt posted a $2.7 billion inflow.

Chinese stocks saw a $0.6 billion outflow, while China debt posted April inflows of $0.9 billion, a seventh consecutive positive month.

“EM ex-China equity has seen outflows, mainly attributed to the more hawkish stand by the (US Federal Reserve) and the prospects of looser monetary stance disappearing,” IIF economist Jonathan Fortun said via an email.

“China equities have followed a same path and April saw small outflows in this category too. Having said that, we see China’s stocks gaining momentum, especially if stimulus policies meet market expectations.”

After having priced-in a rate cut from the Fed in the first half of the year for months, a 25 basis-point reduction in the benchmark rate is only priced in for September, data from the CME FedWatch tool show.

 

  • Reuters with additional editing by Jim Pollard

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.

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