EM: the epicenter of investor angst

February 12, 2016

As emerging markets lagged developed markets yet again in 2015, the outflow figures were staggering.  According to research of Capital Economics, investors pulled $270 billion from emerging markets last quarter that surpassed withdrawals during the financial crisis of 2008. China led the outflows, with about $159 billion pulled out of its economy in December 2015.  EMD has been particularly unpopular.  While the search for yield has led to sustained interest in EM equity and debt searches, the appetite for entry must be questioned when we look at the current outflow figures. As markets enter 2016 on an exceptionally uncertain footing, one can only imagine that the risk appetite for EM securities of any kind is less assured.  We will watch this space with interest over 2016.