Chinese stocks, emerging market debt see large inflows in February, says IIF

NEW YORK : Foreigners added nearly $16 billion to their emerging market portfolios in February, with investors loading up on Chinese stocks as well as debt across developing economies, a report from a finance trade group said on Thursday.

Chinese stocks sucked in $11.2 billion, but selling elsewhere meant emerging market equity portfolios saw a net outflow of $2.1 billion last month. The picture was the reverse in fixed income, where Chinese bonds posted a $15.1 billion outflow though emerging market debt elsewhere raked in $33.2 billion.

The overall $15.9 billion net inflow to emerging market portfolios last month compares with $21.2 billion in January and $27.8 billion in February 2024 according to data from the Institute of International Finance (IIF).

The February inflow to Chinese equities was the largest for any month since September and the second largest in over two years.

"The 'animal spirits' are being awakened with a recognition of the advances that Chinese companies made in diverse areas such as AI and electric vehicles," said Guilherme Valle, founding partner and portfolio manager at ABS Global Investments in an email exchange.

"The combination of innovative business models and low valuations will continue to provide a favorable backdrop for Chinese equities," he said.