The International Finance Institute said on friday that the flow of new funds into emerging markets should recover this year and after a flood of dollars over the last decade, driven by loose monetary policy in the United States, Europe and Japan.
According to the report released: “Global growth seems more positive, but the world is a more difficult country for emerging markets that depend on foreign capital inflows.”
Quantitative relief from G3 countries in recent years has helped distribute funds to emerging markets in search of yield. This led to a “overload of positioning” with overcrowded investors in emerging market assets, said IIF.
Flows in China accounted for most of the recovery in the first quarter, he said. China’s exemption from previous quarters showed that consecutive recoveries were weaker.
The report also wrote: “Despite a positive growth background, capital flows to emerging markets outside China will recover modestly in 2019 and 2020, while remaining low on the levels observed in 2017.”
IIF said that China’s total net capital inflows are projected to reach $ 50 billion in 2019 and $ 110 billion in 2020.
Net inflows of non-resident capital are likely to be further moderated in 2019, in step with the expected decline in output. Non-resident capital assets in Turkey should begin to grow in the second half of 2019, assuming reform Reliable structural factors helped improve feelings, said IIF.
Turkey’s lira has come under renewed pressure in recent weeks, as it nearly poured 30 percent against the dollar last year. This prompted local banks to ban lending to their foreign counterparts last week, an action that spooked foreign investors./Investing.com