NEW YORK, (Reuters) – The China versus the rest of the emerging market divide in foreign portfolio flows continued in January with $8.8 billion net flows from China to this second largest economy. This contrasted with $7.7 billion outflows from the rest EM.

According to data provided by the Institute of International Finance, January’s foreign net portfolio inflows into emerging markets was $1.1 billion. This is the lowest level since March last year. This compares with inflows in the January 2021 of $79.7 trillion and December’s $15.8 billion.

Jonathan Fortun (IIF economist) stated that investors are withdrawing money from emerging market bonds and equities at a rapid pace since March 2021. This is due to anxiety over tighter monetary conditions and geopolitical frictions, and fear of a slow recovery for many countries from this year’s pandemic.

According to the IIF, flows to ex China EM were at a sudden halt last quarter.

Last month, Chinese debt was worth $9 billion while equity markets saw $0.2 billion net outflows for the first time since September 2020.

Rest of emerging markets experienced net outflows totaling $4.5 Billion in debt. This was the largest outflow since March 2020. However, $3.2 Billion in equities outflow was the biggest since October 2021.

Latin America experienced a $6.5 billion net inflow, which was all related to equities. This coincided with a huge outperformance of the region’s stock market versus developed and EM markets.