Retail Investors Withdraw from Emerging Market Bonds

NEW YORK (Reuters) – Retail investors pulled $3.2 billion out of emerging market bonds this week, marking the largest outflow in 109 weeks. Hard currency funds saw a decline of $2.9 billion, according to JPMorgan's report on Friday.

ETF outflows increased to $1.1 billion, while non-ETF outflows rose significantly to $2.2 billion.

Emerging market assets are anticipated to face pressures due to newly announced policies by U.S. President-elect Donald Trump, which could strengthen the dollar and lead to a higher-than-expected neutral rate from the Federal Reserve.

As rates rise in developed markets, they attract funds that may have otherwise flowed into emerging markets (EMs).

In the latest weekly non-resident flows to EM portfolios, local bonds experienced outflows led by Hungary at $677 million. Additionally, equities also saw net outflows amounting to $1.7 billion from India.