Investors are fleeing emerging-market stocks at the fastest pace since 2015 as the US vs China trade-war fears escalate. Emerging market stocks and bonds suffered the biggest daily outflows of 2019 on Friday, August 5th. Analyzing high frequency data from local stock exchanges and debt offices, the Institute of International Finance showed (IIF), found that $2.33 billion of portfolio money had been pulled from developing bond and stock markets on Friday - the largest daily outflows of the year.
"Friday's Trade Tantrum II is now the 5th worst day for EM flows since (early) 2018," the IIF said. The emerging market ETF had outflows of just over $1 billion on Friday, Aug. 2.
So there's been a lot of capital outflows out of emerging market stocks in just the last week!
Articles About The Record Capital Outflows Out Of Emerging Market Stock Markets:
1) Investors are fleeing emerging-market stocks at the fastest pace since 2015 as trade-war fears escalate https://markets.businessinsider.com/news/stocks/emerging-market-stocks-large-outflows-on-trade-concerns-this-week-2019-8-1028435206
2) Investors Are Fleeing Emerging Markets Stocks as Trade War Heats Up https://fortune.com/2019/08/05/investors-fleeing-emerging-markets-trade-war
3) Emerging debt, stocks suffer biggest daily outflows of 2019 on Friday https://www.nasdaq.com/article/emerging-debt-stocks-suffer-biggest-daily-outflows-of-2019-on-friday-20190805-00696
What are capital outflows?
What is flight capital? https://www.investopedia.com/terms/c/capitalflight.asp
History of Argentina's capital outflow, hyperinflation and Great Depression of the late 1990s: https://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_great_depression
History of the 1997 Asian Financial (Asian Tiger) Crisis:
So the main reasons for emerging market problems (headwinds) now and going forward will be:
1) China's economy is slowing down a lot and China is the #1 export client for many emerging market countries
2) Too much total debt in emerging market economies, especially dollar denominated debt (with the US Dollar still being strong relative other other fiat currencies- monitor the Trade Weighted Dollar Index) https://fred.stlouisfed.org/series/TWEXB
3) Capital Outflows leaving emerging markets and coming to the US
4) Lower base metal and energy prices since many emerging markets have lots of commodity producer exposure.
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