Chinese Assets Maintain Sizzling Momentum as IIF Records Nearly USD 40 Billion in August Net Foreign Inflows

On September 11, the Institute of International Finance reported that foreign investors funneled approximately USD 45 billion into emerging-market equity and bond portfolios in August, the strongest monthly inflows in almost a year. The majority of these funds were directed toward Chinese assets, while non-Chinese emerging markets saw substantial equity outflows, underscoring a clear shift in investor sentiment.

According to IIF figures, emerging-market portfolios attracted a net USD 44.8 billion in August, up from a revised USD 38.1 billion in July and USD 28.2 billion in August 2024. Chinese bonds and equities combined drew USD 39 billion, whereas non-Chinese emerging-market bonds registered USD 13.2 billion of inflows and equities suffered USD 7.4 billion of outflows after three consecutive months of positive flows.

Jonathan Fortun, Senior Economist at the IIF, observed that this marked the weakest month for equity flows into emerging markets outside China since spring, reflecting a marked reversal of mood toward those markets. At the same time, softer-than-expected U.S. inflation data have bolstered expectations of imminent Federal Reserve rate cuts, a development that typically redirects capital into higher-yielding emerging markets.

Regionally, Asia’s emerging markets secured USD 18.1 billion of inflows, Latin America attracted USD 8.9 billion—boosted by bond flows into Mexico and Brazil—Emerging Europe drew USD 8.7 billion, and the Middle East and North Africa saw USD 5.8 billion. Fortun highlighted that although all regions outperformed July’s inflows, China’s central role in global portfolio allocations remains undiminished, with August representing the largest month for Chinese equity inflows since February.

Goldman Sachs Research data further illustrate this trend. In August, global hedge funds’ net purchases of Chinese stocks—including both A-shares and Hong Kong-listed shares—reached their highest level since September 2024, while gross exposure to China hit a two-year peak. Goldman Sachs Prime Services noted that hedge fund risk appetite toward Asian equities has remained elevated for four straight months, with Chinese equity positions rising 76 basis points in August to a two-year hig