1. EM Capital Flows Chartbook
Stress from Within:
EM Capital Flows Chartbook
Charles Collyns
Managing Director and Chief Economist
October 2015

2. Non-Resident Portfolio Flows to Emerging Economies
Rollercoaster Ride
Non-Resident Portfolio Flows to Emerging Economies
$ billion
Source: IIF.
Data embedded in chart.

3. Daily Equity and Bond Flows to EMs
$ billion, all available countries
T:\ECON\CapitalFlows\2015\1. January\Final Charts
Source: National Sources, Bloomberg, IIF Calculations. Last Observation: Oct. 5th
Note: Includes Indonesia, India, Korea, Thailand, South Africa, Brazil, and Hungary.
Data embedded in chart. 3

4. Retrenchment of Both Debt and Equity Flows
Source: IIF EM Monthly Portfolio Flows Tracker.
Data on final slide.

5. Retrenchment Across Regions
Source: IIF EM Monthly Portfolio Flows Tracker.
Data on final slide.

6. Institutional Investors May Be Capitulating
$ billion
Source: EPFR, IIF.
Data embedded in chart.

7. Diminishing EM Quarterly Capital Inflows
Source: National Sources, IMF, IIF.
Data on final slide.

8. Worst Year for EM Capital Inflows Since 2004
Source: IIF.
Data on final slide.

9. First Year With Net EM Capital Outflows Since 1988
Source: IIF.
Data on final slide.

10. Heavy Loss of EM Official Reserves
Source: IIF.
Data on final slide.

11. EM Growth Shock
Source: IIF.
Data on final slide.

12. RMB Shock
Source: China Foreign Exchange Trading Center, Bloomberg, IIF.
Data on final slide.

13. Who’s Been Hurt The Most?
Source: IIF.
Data on final slide.

14. Drought Likely To Be Protracted
Source: IIF.
Data on final slide.

15. Hoping for EM Growth Turnaround in 2016
Source: National Sources, IMF, IIF.
Data on final slide.

16. China Capital Flows – Where Next?
Source: SAFE, IIF.
Data on final slide.

17. Watching the Fed
Source: U.S. Federal Reserve, IIF.

18. Where’s the Inflation? U.S. Earnings & Employment Cost Index
U.S. Beveridge Curve ( Data)
% oya
job openings rate in % of total jobs (filled and vacant)
LHS: T:\GUEST\GlobalMacro\US\4 Labor_Market\US wage inflation - ECI and Avg Hourly Earnings.xlsx
RHS: T:\GUEST\GlobalMacro\US\4 Labor_Market\US unemployment rate and job openings rate3_HAVER.xlsm
unemployment rate, % of labor force
Source: U.S. Bureau of Labor Statistics.
Source: Haver, Bureau of Labor Statistics, IIF.
Data embedded in chart.

19. Fed and ECB: Crosswinds for EM Flows
December 2016 Policy Rate Expectations
Estimated Contributions to EM Portfolio Flows
$ billion; cumulative contribution since 1/1/2013
percent per annum
LHS: T:\GUEST\GlobalMacro\Saacha Mohammed\Fed and ECB Expectations_3.xlsx
RHS: Ask Robin to Update
Source: Bloomberg, IIF.
Last Updated: September 2015.
Source: IIF.
Data embedded in chart. 19

20. Closer Global Connections
EM Risk Betas Estimated Using EM MSCI and U.S. BBB Spread
estimated % response to 1% increase in global risk aversion
Source: Bloomberg, IIF.
Data embedded in chart.

21. Who’s Most Exposed?
Estimated Risk Betas vs. Share of Foreign Ownership of Stocks
Risk Betas Estimated Using Bond Spreads vs. CA Balance
percent of GDP, estimated for
percent of GDP, estimated for
Source: Bloomberg, IIF.
Source: Bloomberg, IMF, IIF.
Data embedded in chart.

22. Checking Central Bank Credibility
percent
Some above, some below target: some have more reason to ease, some less
Above Target in End-2015
Below Target in End-2015
Source: Bloomberg, IIF. Inflation is IIF’s year-end forecast from September 2015 Global Economic Monitor
Data embedded in chart. 22

23. Rise of Corporate Indebtedness
Source: BIS, IIF.
Data on final slide.

24. EM Non-Financial Corporate Debt
percent of GDP, 2015Q1
Ask Arpitha
Source: BIS, IIF.
Data embedded in chart. 24 24

25. Cost of Currency Mismatches
Source: BIS, IIF.
Data on final slide.

26. Takeaways EM capital flows have been hit by home-made stress
EM growth disappointments
China’s policy trilemma
Protracted drought more likely than quick rebound
It can get worse. Watch out for:
Further RMB surprises
Return of the Fed hawks

27. Data