Investors pull $41.7bn from emerging markets amid coronavirus outbreak

Outflows from emerging market stocks and bonds since the onset of the coronavirus outbreak have dwarfed the amount that left EM assets at the start of the global financial crisis, highlighting the strength of risk aversion among global investors. Foreign investors have withdrawn $41.7bn from EM stocks and bonds since global markets woke up to the Covid-19 outbreak on January 21, according to the Institute of International Finance. That was double the amount of outflows in the same 51-day period after September 8, 2008. “It is a huge number,” said Robin Brooks, chief economist at the IIF. “This means another big tightening in financial conditions for emerging markets, because that’s what outflows are, a sudden stop.” Most of the outflows have been from equities rather than bonds, as investors fear that companies in emerging economies will be hit particularly hard in the global slowdown expected this year.