Among the seven emerging markets, it has been analyzed that the most significant outflow of foreign funds has occurred in South Korea in the past three months, following China. It is interpreted that foreign investors who withdrew from the Chinese stock market prefer other emerging markets like Vietnam and Mexico over South Korea.
On Jan. 25, IBK Securities compiled the net outflow amount of equity funds in seven emerging markets -- Brazil, China, India, South Korea, Mexico, Taiwan, and Vietnam -- over the past three months in a report titled “Time to Note the Post-China Era.” Overseas funds mainly move in equity funds, such as Exchange-Traded Funds (ETFs), and by analyzing the inflow and outflow amounts, one can observe the trend of how foreign investment funds have moved.
China recorded a net outflow amount of US$7.40 billion, indicating that foreign investors withdrew the most funds from China among the emerging markets. South Korea ranked second, recording a net outflow of US$520.3 million. This amount surpassed the net outflow from Vietnam, which was US$69 million.
On the other hand, there was a net inflow of funds amounting to US$1.38 billion into the Indian stock market. Brazil recorded a net inflow of US$400.1 million, Mexico had US$274.9 million, and Taiwan saw a net inflow of US$206.4 million. While global investors are seeking investment destinations among emerging markets in the “post-China” era, South Korea is interpreted as not being able to position itself as a new investment destination.
The size of fund inflows and outflows among emerging markets has been diverging since last year. Particularly, as we move into the second half of the year, the differences among emerging markets have become more pronounced. IBK Securities revealed that the intensity of inflow and outflow for equity funds in China and South Korea as of this month stood at -10.1 percent and -3.2 percent, respectively. The lower the intensity of inflow and outflow, the more rapidly funds have exited the stock markets of the respective countries. On the other hand, India showed a vigorous capital inflow intensity of 18.4 percent, Mexico of 6.7 percent, and Vietnam of 2.9 percent.