Vaccine, U.S. election news drive record $76.5 bln inflow to EM -IIF

NEW YORK, Dec 1 (Reuters) – Foreign investors poured a record $76.5 billion into emerging market portfolios in November, powered by positive COVID-19 vaccine news and the apparent normalization of the U.S. transfer of power, the Institute of International Finance said in a report on Tuesday.

About $39.8 billion made its way to emerging market equities, the second-largest monthly cash inflow towards the asset class on record, with China seeing about $7.9 billion.

Some $36.7 billion was directed toward bonds and other debt. The monthly debt flows were the tenth highest on records kept by IIF.

The November figure compares to net inflows so far this year of $166.5 billion according to the IIF data. Year to date, stocks have seen a net $16.6 billion inflow while nearly $150 billion has poured into debt portfolios.

“Recent headlines on potential vaccines, combined with the resolution of uncertainty regarding the U.S. election, have benefited capital flows greatly,” wrote IIF economist Jonathan Fortun.

He added there continues to be “growing differentiation in flows to EM, with some markets still lagging and not capturing all the benefits of this rally, and other markets benefiting from high liquidity.”

This year also saw the largest monthly outflow on record when $90 billion exited non-resident emerging market portfolios in March, as uncertainty over the effect of the COVID-19 pandemic sent investors rushing out of riskier assets.

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