Foreign Capital Outflow
The Institute for International Finance announced on Dec. 13 that emerging economies recorded a total net capital outflow of US$33.8 billion in the third quarter of this year. It is the largest quarterly amount since the last quarter of 2008, when the total had amounted to US$119.4 billion. In addition, emerging economies recorded a capital outflow for the third consecutive month for the first time since then. “These economies are likely to post a net inflow for this year as a whole, but the size is likely to be the smallest since 2008,” the institute explained.
By country, US$10.9 billion flowed out of Korea in the third quarter, with foreign investors withdrawing US$7.6 billion and US$3.2 billion from its stock and bond markets, respectively. It was followed by Brazil (US$7.5 billion), Turkey (US$5 billion), Thailand (US$3.4 billion), India (US$2.7 billion), Malaysia (US$2.5 billion), Indonesia (US$2.2 billion) and Hungary (US$1.2 billion).
According to the LG Economic Research Institute, emerging economies have attracted a total of US$3.51 trillion since the financial crisis of 2008, whereas the amount was US$1.79 trillion from 2003 to 2007. Their bond markets have accounted for US$1.18 trillion of it, close to 450 percent of the amount for the previous five-year period. The funds in the bond markets can flow out at any time, even before maturity, once the market and credit conditions of these countries deteriorate.
According to the Bank of Korea, foreign funds worth US$165.3 billion arrived in Korea from 2009 to 2014, US$22 billion less than that between 2003 and 2007. During the financial crisis of 2008, no less than US$37 billion left Korea.