NEW YORK, (Reuters) – Net capital flows into emerging markets increased last month, from November, and dropped more than 75% annually, with China being the largest recipient. Investors fear that other economies will continue underperform because of COVID-19. A survey was released Tuesday.

Data from the Institute of International Finance revealed that nonresident flows to emerging market markets reached $16.8B last month. This compares with $13.7B in November, and $70.2B in December 2020.

China maintained positive debt inflows, taking in $10.1 million last month. This was just enough to offset the $9.6billion net outflow from other emerging markets.

China was the largest stock market participant with 77%, taking in $12.5 Billion of $16.3 Billion net flows.

Jonathan Fortun, an economist at the IIF, stated in a statement that “Foreign investments in emerging market bonds and stocks outside China have come to an abrupt stop over fears that many economics will not quickly recover from the pandemic”

“We think that the outlook for the future is worsened due to the Omicron(COVID) variant, expectations of stronger dollars and higher U.S. Interest rates.”

The U.S. Federal Reserve increased its taper on bond purchases last month and revealed more aggressive rates hike projections.

Graphic: Foreign portfolio flows into emerging markets- https://graphics.reuters.com/GLOBAL-EMERGING/EMBARGOED/jnvweayalvw/chart.png

The preliminary IIF data showed that EM portfolios attracted $380.6 million from non-residents last year, compared to $382.9 billion for 2020.

The data shows that net flows to China were 55% and 65% of total 2021 inflows, respectively. China accounted to 108%, with $52.8billion in net flows, compared with $3.8billion from the rest.

Fortun said, confirming the trend of the previous quarter.