Emerging markets see weakest flows since financial crisis: IIF

NEW YORK (Reuters) - Emerging market equities and bonds suffered $3.1 billion in outflows in December, marking their sixth consecutive month of retrenchment and the sector’s weakest year since the global financial crisis, according to the Institute of International Finance.

The Washington-based group, one of the most authoritative sources of data on investment flows to the developing world, said in a report released on Monday that emerging market equities had $7.1 billion in outflows, while emerging debt markets had $4.0 billion of inflows in December.

The Federal Reserve beginning its interest rate tightening cycle along with continued slips in commodities contributed to reduced investor interest in emerging market assets, according to IIF.

“A slowdown in growth as measured by our EM Growth Tracker added to investor concerns, particularly against the backdrop of the commodity price slump,” said IIF.

The negative streak of flows out of emerging markets initially was thought to have seen a break in October, when the sector saw inflows of $13.9 billion. However, a revision of the data showed that October also saw total outflows of $8.2 billion and the sector had negative flows for the entire second half of 2015.

On a quarterly basis, outflows to emerging markets fell from $33 billion in the third quarter of 2015 to $13 billion in the last quarter of the year, the IIF statement said.

Total non-resident inflows fell to $41 billion in 2015 from an average of $285 billion from 2010 to 2014, with equity flows in 2015 totaling $13 billion and debt flows at $28 billion.

Reporting by Tariro Mzezewa; Editing by Alistair Bell