Beautiful Virgin Islands

Friday, May 09, 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markets are undergoing their worst wave of capital exodus in around seven years, with a net total of US$4 billion withdrawn from equities and bonds combined in June, according to the Institute of International Finance (IIF).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But a net total of US$4 billion was withdrawn from emerging markets’ equities and bonds combined in June, marking the fourth straight month of net losses, the Washington-based IFF said.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after China suffered a huge foreign capital outflow from its securities markets in 2015, when around US$670 billion was withdrawn.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
Historic Papal Conclave Set to Commence in Rome
Huge Copper, Gold, and Silver Discovery in Argentina and Chile — But the Profits Go Abroad
Prince Harry is pleading for reconciliation — but the royals are just as sick of his victimhood as everyone else
The Road to Freedom: She Protested Putin, Escaped House Arrest, and Survived a 2,800-Kilometer Journey
OpenAI's Flip-Flop: No Longer Going Commercial, Back to Nonprofit, After Musk Lawsuit and Backlash
“Trump Supporter” Aims to Bring a MAGA-Style Shift to Romania
First From China: Zhao Xintong Wins the Snooker World Championship
Nvidia Faces Billion-Dollar Losses – Warns: China Is on Its Way to Becoming an AI Superpower
Trump Rules Out Third Term, Names JD Vance and Marco Rubio as Potential Successors
Mexico Says ‘No’ to U.S. Troops: President Sheinbaum Rejects Trump’s Offer to Fight Cartels
Nigel Farage’s Reform UK Storms the Map, Wrecking the Two-Party Monopoly
DOGE: Reimagining Government Operations with AI
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
U.K. Court Rejects Prince Harry’s Final Appeal Over Police Security
Prince Harry’s Heartfelt Outburst Rocks the Royal Family
Trump Shares AI-Generated Image of Himself as… Pope, Prompting Outrage Reaction
Transgender Swimmer Secures Five Gold Medals at U.S. Masters Championship
Prince Harry: “I Want Reconciliation with My Family”
Germany's Alternative für Deutschland (AfD) party has now been officially labeled “right-wing extremist” by the federal office for the so-called “protection of the constitution.”
Amazon Launches Satellite Internet Service Amidst Competition with SpaceX
Transformative Changes in Women's Wrestling: The Rise of WWE Superstars
The Rush to the White Gold: Global Investment Surge in Natural Hydrogen Exploration
This is a day in Spain without electricity and internet
Reform UK Surprises in British Elections, Challenging Traditional Two-Party System
180-Year-Old Christian University in South Carolina Announces Closure Due to Unmet $6 Million Fundraising Goal
Brazilian Woman Jailed for Fourteen Years for Writing “You Lost, Idiot” on Statue During Protest
Trump Administration Removes National Security Adviser Mike Waltz Amid Signal Chat Controversy
Dutch Politician Eva Vlaardingerbroek Receives Spyware Threat Alert from Apple
Paramount Board Considers Settlement in Trump’s $20 Billion Lawsuit Over "60 Minutes" Interview
U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions
Deadline Looms for RTS Meter Replacement: Hundreds of Thousands at Risk of Heating Disruption
Sweden Grapples with Deadly Gun Violence: Suspect Arrested After Three Young Men Killed in Uppsala Hair Salon
Walz Reveals Why Harris Chose Him as Her Running Mate and Reflects on Democratic Losses
Spain Restores Power After Unprecedented Nationwide Blackout
Carney Secures Liberal Mandate in Canada’s Federal Election
Death Penalty Sought as Luigi Manion Pleads Not Guilty in CEO Murder Case
President Trump contacts Jeff Bezos after reports of Amazon considering listing tariff surcharges; company clarifies no such plan for main platform
Spain and Portugal Recover from Massive Blackout
Liverpool Clinches Record-Equalling 20th English League Title Under Arne Slot
Singapore Politicians Warn Against Foreign Interference in Election
Driver Ploughs into Vancouver Festival Crowd, Killing Nine
Depression, Fear of Defamation, and a Tragic End: New Details on Virginia Giuffre’s Suicide
“Sharia for UK, Allah Akbar!”
Massive Explosion at Iran's Bandar Abbas Port Linked to Suspicious Chemical Shipments
Incident Reflection: A Harsh Reality Check
Pakistani migrants to Danish man: “ “We have 5 children while you have 1 or 2. In 10 years, there will be more Pakistanis than Danes here.“
Clashes Erupt in London as Tensions Rise Between Indian and Pakistani Communities
Specialized anti-drone weapons deployed among security personnel Ahead of Papal Funeral
How do you fix this culture?
×