LONDON, Jan 7 (Reuters) - 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-U.S. 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 $310 billion, easily surpassing 2018 flows of $194 billion when crises in Turkey and Argentina put some investors off, the IIF said. However, 2019 still fell short of the $375 billion emerging markets attracted in 2017.
In December, emerging market equities attracted healthy inflows of $12.9 billion. Chinese stocks accounted for $10.1 billion, meaning markets outside the world’s second largest economy attracted positive flows for the first time since July.
Emerging market equities jumped more than 5% 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 $17.8 billion 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.
Reporting by Karin Strohecker; Editing by David Clarke