(Bloomberg) -- Here's a warning sign for Asia's central banks.
Investors have started pulling out of emerging markets with the biggest slump in portfolio flows since the 2016 U.S. presidential election, according to analysts at the Institute of International Finance.
Asia has taken the brunt of the reversal with South Korea, Indonesia and Thailand seeing the biggest outflows of the countries in the study. Those withdrawals have been concentrated in equities, while bonds have been hit less hard. India is bucking the trend with continued demand for both stocks and bonds.
IIF analysts say the countries they are tracking registered nearly $4 billion in outflows since flows turned negative on Jan. 30. Some $3.4 billion of that has been from equities.
“While we remain generally optimistic on EM flows this year, downside risks should not be understated,” IIF analysts led by Fiona Nguyen wrote in a note. “A sustained global equity market sell off would clearly be one such downside risk.”
To contact the reporter on this story: Enda Curran in Hong Kong at ecurran8@bloomberg.net.
To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, James Mayger, Tomoko Yamazaki
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