Emerging markets in panic. It hasn't been this bad since the outbreak of the pandemic

Capital worth USD 70.3 billion flowed out of emerging markets in March, after inflows reached USD 22.4 billion in February, the Institute of International Finance (IIF) reported in a report.

IIF reports that this is the weakest monthly result since March 2020.

“The deterioration was largely driven by equities, with most of it in emerging markets in Asia. The key variable for forecasts is currently the duration of the war with Iran,” it said.

Outflows from equity markets in March totaled $56.0 billion, the largest monthly equity outflow since the pandemic shock.

Looking ahead, the duration of the Iran war is now a key variable for capital flows into emerging market portfolios, the IIF reports.

“If the conflict proves to be short-lived and disruptions in energy markets begin to subside, March may prove to be the peak month for outflows, with losses continuing to be concentrated in equities, especially in Asia. However, if the conflict persists, the implications for emerging markets will become more serious,” it said. (PAP Business)

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