The First Net Capital Outflow In Emerging Markets In 27 Years In 2015

After the financial crisis caused fluctuations in the whole industry, once the growth rate of the "favorite" emerging market countries of investors has dropped to the lowest level, they will not be able to invest more in emerging markets in a short time.

It is widely expected that the Federal Reserve will raise interest rates for the first time in December. Analysts are now trying to assess the impact of the rate hike on emerging markets. The BIS warned that the "tightening panic" in 2016 would be more serious than in 2013.

The US employment report for November released on Friday (December 4th) is better than expected, showing that the number of American jobs increased by 211 thousand in November, which raised the possibility of raising interest rates by 80% at the December FOMC meeting.

The Swiss Bank branch of the BIS said in its quarterly summary on Sunday that weak financial market conditions, coupled with the expected increase in the Fed's rate hike, may exacerbate the "tightening panic" in emerging market economies.

BIS says,

The spread of the index of the economy's bond index compared with the US 10 year treasury bond, the Fed issued a tightening monetary policy, suggesting that the bond yield rose sharply after the tightening of the market, which is more risky than the 2013 Federal Reserve's announcement of the upcoming cut in debt purchases.

As economic growth slows, the disadvantages of emerging markets are easier to show in foreign exchange markets than other asset classes.

Fear of raising interest rates shrouded the market.

In September, such as Brazil's real estate, Turkey lira and Columbia Peso all fell to a record low.

The bank for International Settlements added that more and more signs of emerging market domestic currency yields are growing fast in the US.

The post crisis era has a strong international spillover effect, from the yield of US Treasury bonds to emerging markets, even though these countries are in different stages of the economic cycle.

This effect seems to strengthen with time.

According to the Institute of international finance, the weakening of investor sentiment and cash outflow mean the first time that emerging markets appeared in 27 years in 2015.

Flow out.

Johan Jooste, chief investment officer of Azure Wealth, Fortune Management Inc, Switzerland, said that although he did not believe in fund flow data, investors should at least be judged on the basis of fund flow data if they want to invest.

He told CNBC that fund flow data could reflect the expectations of fund managers, rather than suggesting measures that might be taken later.

But he added that this was realized a year or two ago, when the Federal Reserve hoped to reduce asset purchases to stimulate the development of the US economy and where capital flows.