Net capital flows to EMs at their lowest since global financial crisis: IIF

Tokyo

A COMBINATION of the reflationary "Trump trade" and a more hawkish policy stance by the US Federal Reserve has thrown global capital markets into disarray, with the result that overall net financial flows to emerging markets in 2016 slumped to their lowest level since the global financial crisis, the Institute of International Finance (IIF) reported on Wednesday.

Capital outflows have been most severe in debt markets and have accelerated since Donald Trump became President-elect of the United States on Nov 8, 2016, according to the Washington-based IIF. China is suffering severe net outflows while India too has also seen capital flight in the wake of its demonetisation initiative.

"One of the most striking features of the current downturn in flows has been its endurance," according to the report from the IIF, which describes itself as a global association of the financial industry with nearly 500 leading international banks and other financial institutions from 70 countries among its m…