Emerging market equity funds hit nine straight weeks of outflows

Emerging market equity funds recorded their ninth straight week of outflows in the period ending July 1, with redemptions accelerating sharply to around $2 billion from $500 million the prior week, marking the longest such streak since the 2022-23 period. The persistent selling reflects deepening risk aversion toward developing economies as geopolitical tensions and profit-taking in technology stocks continue to weigh on sentiment.

Asia Bears the Brunt

Foreign investors withdrew $580 million from Indian equities in the latest week, a steep increase from $94 million the week before, according to a report by Elara Capital cited by Fortune India. Taiwan witnessed its highest foreign outflow in 11 years at $766 million, while South Korea saw outflows of $283 million.fortuneindia+1

The weekly figures are part of a broader trend. Foreign investors pulled a net $137.36 billion from shares across South Korea, Taiwan, India, Indonesia, Thailand, Vietnam, and the Philippines in the first half of 2026 — the fastest six-month outflow in LSEG data going back to 2010, according to Reuters. South Korea and Taiwan bore the brunt, shedding $70.8 billion and $29.6 billion respectively during the half-year, driven by profit-taking in AI and semiconductor stocks that had rallied sharply.reuters

Brazil and Broader Weakness

Brazil remained the weakest market among tracked emerging economies, with cumulative withdrawals of nearly $2 billion over seven weeks. The country faces a combination of political uncertainty ahead of the 2026 presidential election and investor preference for short-term positioning.linkedin+1

The outflows represent a reversal from early 2026, when emerging market funds attracted record inflows. In January alone, diversified emerging markets funds saw $15.4 billion in inflows — the largest on record, according to Morningstar. The turnaround began in March as the escalation of U.S.-Israeli conflict with Iran disrupted oil markets and triggered a broader risk-off shift.morningstar+1

Structural Headwinds Persist

The Institute of International Finance reported that non-resident investors removed $26.6 billion from emerging market bonds and equities during May, reversing the $70.6 billion influx seen in April. In India specifically, foreign investors have now withdrawn over Rs 2.7 lakh crore from equities in 2026, far surpassing the prior year's total outflows.reuters+2

Despite the selling pressure, global equity funds overall recorded $10.44 billion in net inflows in the week to July 1, as investors selectively added technology stocks on valuation pullbacks.reuters