Emerging-market investment inflows hit 2-year high in July -IIF

WASHINGTON, July 28 Mon Jul 28, 2014 5:26pm EDT

WASHINGTON, July 28 (Reuters) - Portfolio investment into emerging markets reached a two-year high in July at $44 billion, the Institute of International Finance said on Monday.

That was up from a $37 billion inflow in June, the global financial industry group said in the monthly report.

Equity investment flows accounted for $16 billion, up from $7 billion in June, the IIF reported, while bond markets took in $28 billion, down slightly from last month's $29 billion.

The bond investment flows were supported by the volume of primary issuance from emerging borrowers, who raised $11 billion in July.

IIF chief economist Charles Collyns said $195 billion has flowed into emerging markets so far this year, only $14 billion short of the amount seen in 2013, when investors were spooked by plans by the U.S. Federal Reserve to taper the pace of its stimulative bond buying.

"Emerging markets have rebounded strongly from last year's taper tantrum and are on track for record inflows this year, propelled by avid risk appetite and little concern about the prospect of rising global interest rates," Collyns said. "Investors seem confident - perhaps overconfident - that Fed exit will unfold very gradually," he said.

The U.S. central bank is poised to shutter its bond-buying program this fall and economists expect it will begin to push benchmark interest rates up from their current level near zero in the second quarter of next year. (Reporting by Moriah Costa; editing by Gunna Dickson)

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