Investors have withdrawn $70 billion from developing country bond funds since the beginning of 2022, according to an analysis by JPMorgan Chase & Co. based on data from EPFR Global.
This is the largest capital outflow since JPMorgan began tracking this data in 2005.
Last week alone, net outflows from emerging markets bond funds amounted to $4.2 billion.
The growth of interest rates in developed countries increases the attractiveness of their assets and reduces interest in less reliable securities of emerging markets, writes the Financial Times newspaper. At the same time, the strengthening of the US currency increases the cost of developing countries to service the dollar debt.
In September, JPMorgan raised its 2022 emerging market bond fund outflow forecast to $80 billion from $55 billion, and the bank’s emerging markets analyst Milo Gunasinghe notes that investor capital outflows are unabated so far.
