South Korea and Taiwan Lead $46.1 Billion Equity Outflows from Emerging Markets
0xBroomberg
Foreign investors pulled a net $46.1 billion from emerging-market equities in June, with South Korean and Taiwanese tech stocks bearing the brunt; bonds cushioned part of the blow, but overall portfolios still lost $17.8 billion — capital is willing to lend, not to own.
Where did the money go?
South Korea saw $30.5 billion in outflows — the largest single-month exit in over 25 years. Taiwan lost $18.3 billion in the same period.
Both markets are tech-heavy. This means → the sell-off targeted concentrated tech positions, not emerging markets as a broad category.
Chinese equities shed $14 billion, a sharp reversal from May's $8.1 billion net inflow; Chinese bonds also lost $3.7 billion.
How much did bonds cushion?
Even as equities bled, EM bonds drew $28.3 billion in net inflows — a visible hedge.
Yet total portfolio flows still posted a $17.8 billion net loss. In plain terms = the bond bid was sizable but not enough to cover the equity exit.
IIF chief economist Jonathan Fortun wrote: "Investors are still willing to extend debt financing to EMs, but unwilling to add broad equity risk exposure."
How wide is the regional split?
Emerging Asia posted a combined $27 billion in portfolio outflows in June — the undisputed epicenter of the drawdown.
Latin America, emerging Europe, and the Middle East & North Africa all recorded positive flows.
This reflects a selective de-risking of Asian tech exposure, not a blanket EM retreat.
What does the first-half picture look like?
EM sovereign bond issuance hit roughly $170 billion in H1 — the strongest first-half pace in recent years; net issuance already exceeds $100 billion.
June international bond issuers spanned Mexico, China, Latvia, and Bahrain — "confirming that market access remains open across regions," the report noted.
In plain terms = EMs are still attracting capital, but bonds are doing all the heavy lifting while equities keep shrinking.
What is the biggest risk for the second half?
New Fed Chair Kevin Warsh's hawkish lean and volatile oil prices could tighten dollar liquidity, raising the bar for EM risk assets further.
Fortun cited rising global discount rates — the interest rate investors use to value future cash flows; the higher it goes, the lower equity valuations fall — alongside China uncertainty, weakening earnings confidence, and sensitivity to tech and energy positioning as drivers of the equity pullback.
This means → whether equities can stop the bleeding depends on these macro pressures easing in H2; until they do, the money stays away.
Content is for reference only, not financial advice.