Foreign investors have pulled funds out of emerging markets for five straight months in the longest streak of withdrawals on record, highlighting how recession fears and rising interest rates are shaking developing economies.
Cross-border outflows by international investors in EM stocks and domestic bonds reached $10.5bn this month according to provisional data compiled by the Institute of International Finance. That took outflows over the past five months to more than $38bn — the longest period of net outflows since records began in 2005.
The outflows risk exacerbating a mounting financial crisis across developing economies. In the past three months Sri Lanka has defaulted on its sovereign debt and Bangladesh and Pakistan have both approached the IMF for help. A growing number of other issuers across emerging markets are also at risk, investors fear.