Foreign investors pull out $26.3 billion from emerging markets in September as hawkish Fed pushes US Treasury yields higher
Economic Times 1 hr ago·7 Oct 2026, 6:26 pm
Foreign investors have pulled out a record $26.3 billion from emerging markets in September. This sharp reversal is largely driven by the US Federal Reserve's hawkish stance, which has pushed US Treasury yields higher. As American interest rates rise, investors often shift their money back to the US to earn better returns, leading to a sell-off in developing economies.
This exodus is significant because it marks the first major outflow from these markets since June. The selling pressure has been particularly strong in South Korea, dragging down broader emerging-market equities. While investors are still pouring money into emerging-market fixed-income assets this year, the continued outflow from stocks suggests caution among foreign investors.
Investors should watch the upcoming Federal Reserve meeting and US inflation data closely. If US yields continue to climb, emerging-market assets may face further pressure. However, if the Fed signals a pause in rate hikes, capital could flow back into these markets, potentially stabilizing the recent decline.
Excerpt from Economic Times
Foreign investors pulled $26.3 billion from emerging-market stocks and bonds in September due to rising US yields. The hawkish Federal Reserve's interest rate hike influenced this first outflow since June. Additionally, heavy foreign selling in South Korea resulted in a significant decrease in emerging-market…Read the original at Economic Times
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- Category: Stocks.
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