Foreign investors had a net outflow of US$46.1 billion from emerging market equity portfolios in June, according to data from the Banking and Trade Organization. This figure was mainly driven by a sharp sell-off of South Korean technology stocks, which led developing economies to lose their overall portfolios for the second month in a row. According to the monthly report released by the International Finance Association on Friday, foreign investors withdrew 30.5 billion US dollars from the Korean stock market, the largest outflow in more than 25 years. The report shows a clear divergence in capital flows between the stock market and the bond market: although the overall portfolio capital flow was a net outflow of 17.8 billion US dollars, the bond market still attracted 28.3 billion US dollars per month. Jonathan Fortuna, chief economist at the International Finance Association, said: Investors are still willing to lend money to emerging markets, but they are less willing to take on a wide range of stock market risks. Rising global discount rates, weak profit confidence, and sensitivity to technology and energy positions have led investors to cut stock allocations. The information for the first half of the year is clear. Emerging markets are still attracting capital in general, but only because debt inflows completely offset ongoing stock market liquidations.

Foreign investors had a net outflow of US$46.1 billion from emerging market equity portfolios in June, according to data from the Banking and Trade Organization. This figure was mainly driven by a sharp sell-off of South Korean technology stocks, which led developing economies to lose their overall portfolios for the second month in a row. According to the monthly report released by the International Finance Association on Friday, foreign investors withdrew 30.5 billion US dollars from the Korean stock market, the largest outflow in more than 25 years. The report shows a clear divergence in capital flows between the stock market and the bond market: although the overall portfolio capital flow was a net outflow of 17.8 billion US dollars, the bond market still attracted 28.3 billion US dollars per month. Jonathan Fortuna, chief economist at the International Finance Association, said: Investors are still willing to lend money to emerging markets, but they are less willing to take on a wide range of stock market risks. Rising global discount rates, weak profit confidence, and sensitivity to technology and energy positions have led investors to cut stock allocations. The information for the first half of the year is clear. Emerging markets are still attracting capital in general, but only because debt inflows completely offset ongoing stock market liquidations.