March 1, 2019 / 12:30 PM / 3 months ago

Emerging markets bring in $25.6 bln of foreign capital in Feb - IIF

LONDON, March 1 (Reuters) - Emerging markets sucked in a further $25.6 billion of foreign fund flows in February, a slimmer volume than January, but enough to signal investor sentiment remained positive, according to Institute of International Finance (IIF) data.

A dovish shift from the United States Federal Reserve, easing China-U.S. trade tensions and fading anxiety about global growth had helped buoy investors about the outlook for emerging markets, said the IIF, which tracks investor flows across capital markets.

Emerging markets have made a strong turnaround this year after a punishing 2018, with the MSCI Emerging Markets equity index up 9.2 percent so far this year.

“We expect flows to maintain a positive trend in coming months,” it said in the report. “While China has been driving much of the recent pick-up, we expect this pattern to broaden.”

Debt issued by sovereigns and corporates from developing economies attracted $11.8 billion of the flows in February, with a significant portion going to Asia and Latin America.

A total of $13.8 billion went to emerging market equities, with China attracting $10.6 billion of that amount.

Investors in China were positioning themselves ahead of the decision on Thursday by global index provider MSCI to quadruple the weighting of Chinese mainland shares in its global benchmarks by November.

Reporting by Tom Arnold; Editing by Toby Chopra

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