LatAm Lured Cash as Wall Street Ignored Other Emerging Markets

Investors poured $8.3 billion into Latin American debt and equities last month, while withdrawing capital from all other developing regions

Buildings on Faria Lima Avenue in the financial district of Sao Paulo.
By Leda Alvim
January 12, 2023 | 03:38 PM

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Bloomberg — Latin America was the only region in emerging markets to attract fresh investment in December, an indication that Wall Street — despite its optimism on developing assets — is still moving with caution.

Investors poured $8.3 billion into Latin American debt and equities last month, while withdrawing capital from all other developing regions, according to the Institute of International Finance. That resulted in net inflows to emerging markets overall of just $1.7 billion in December, the data show.

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“While the expectation of a Fed pivot helped to improve the overall picture, there are still pockets of risk across the EM complex,” said Jonathan Fortun, an economist at the Washington-based industry group, in a note.

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The IIF expects dollar-debt returns in emerging markets to rebound in the coming year, though rising risk spreads could offset gains if US financial conditions tighten, Fortun wrote.

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