Beautiful Virgin Islands

Tuesday, Jun 24, 2025

China, emerging markets suffering worst capital exodus in 7 years

China, emerging markets suffering worst capital exodus in 7 years

China and over 20 other emerging markets are undergoing their worst wave of capital exodus in around seven years, with a net total of US$4 billion withdrawn from equities and bonds combined in June, according to the Institute of International Finance (IIF).
China and over 20 other emerging markets are undergoing their worst wave of capital exodus in around seven years, a global financial industry association has warned.

Overseas investors withdrew US$2.5 billion net from Chinese bonds in June, according to data from the Institute of International Finance (IIF), while US$9.1 billion net flowed into other emerging markets’ bonds last month.

But a net total of US$4 billion was withdrawn from emerging markets’ equities and bonds combined in June, marking the fourth straight month of net losses, the Washington-based IFF said.

Overseas investors still deposited US$9.1 billion into China’s equities in June, compared with outflows of US$19.6 billion in other emerging markets, the IIF added.

“We see that the current outflow episode is similar in scale to the [yuan] devaluation scare in 2015 and 2016,” IIF economist Jonathan Fortun wrote on Wednesday after China suffered a huge foreign capital outflow from its securities markets in 2015, when around US$670 billion was withdrawn.

Fortun warned that the mounting risk of a global recession was weighing on the capital flow into emerging markets as anxiety builds over geopolitical events, tighter monetary conditions and inflation.

Foreign investors had cut their holdings of Chinese bonds for four consecutive months between February and May, representing a total outflow of around 410 billion yuan (US$61 billion), according to data from ChinaBond.com and Shanghai Clearing House.

China had suffered an “unprecedented” sell-off in late February after Russia’s invasion of Ukraine, with an estimated US$30.4 billion flowing out of its bond market in February and March alone.

Divergent monetary policies with the United States, a stronger expectation of yuan depreciation and the disruption brought on by Beijing’s zero-Covid policy have also contributed.

“The China-US rates spread … remains well below its historical average. The narrowing rate differential is likely one factor behind offshore outflows from China bonds from February to May 2022,” analysts at Nomura said on Thursday.

China’s central bank has relaxed its policy to heal the coronavirus-hit economy rather than accelerating interest rate increases like the US Federal Reserve.

The US Federal Reserve raised its benchmark interest rates by three-quarters of a percentage point in its most aggressive increase since 1994 last month, and US policymakers said on Wednesday that another 50 or 75 basis point increase could also follow later this month.

However, the People’s Bank of China is expected to maintain a moderately easing stance in the second half of the year.

“We are in a global interest rate and high inflation shock,” added Fortun.

“For the coming months, several factors will influence flow dynamics, among these the timing of inflation peaking and the outlook for the Chinese economy will be in focus.”

On Thursday, it was also confirmed China’s foreign exchange reserves fell by a more than expected US$56.5 billion from a month earlier to US$3.07 trillion at the end of June.

This marked the fifth monthly drop in 2022 and reversed a rise of over US$8 billion in May, according to data from the State Administration of Foreign Exchange (SAFE).

“Global economic growth is slowing, inflation remains high, the volatility of the international financial market is increasing, and the external environment is becoming more complex and severe,” SAFE spokeswoman Wang Chunying said.

“However … the fundamentals of [China’s economic] long-term improvement remain unchanged, which is conducive to the overall stability of foreign exchange reserves.”
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
×