The Institute of International Finance showed on Wednesday that emerging market portfolios saw another month of foreign outflows in September, the seventh of the last eight, as non-residents pulled money out of EM stocks and away from China.
China's debt markets lost $1.4 billion in September for a total of $98.2 billion pulled out of the asset class over eight months because investors shy away from a slowing economy.
In September, factory activity there barely grew, and a sluggishness in services sector growth pointed to further cooling as the economy grapples with COVID 19 curbs and softening global demand.
Last month, Chinese stock portfolios lost $0.7 billion. The year-to-date outflow is $2.2 billion.
Ex-China debt saw inflows of $7.5 billion, while EM stock portfolios outside China also posted outflows, with $8.2 billion exiting the asset class last month.
As anxiety builds over geopolitical events and uncertainty about the capacity of policymakers to weather the current context, the global recession risk is weighing on EM flows, according to Jonathan Fortun, an IIF economist.
Foreigners pulled $2.9 billion from emerging market portfolios last month, for a year-to-date figure of $12.7 billion in outflows.
The IIF data showed an inflow of $2.4 billion to Latin America and a $0.3 billion flow to EM Europe last month. There were outflows from all other regions.
This year, weakness was expected in emerging market assets, as developed counterparts broke with years of ultra-low interest rates to fight what has become decades-high inflation. The return rate in stable economies pulls money away from emerging markets.
Russia's invasion of Ukraine in February triggered a spike in food and energy prices, which hurt many EM economies.