Global Investors Withdraw $24 Billion from Emerging Markets in 15 Weeks Amid Oil Price Concerns and Geopolitical Tensions

Global Fund Outflows from Emerging Markets Reach $24.4 Billion

Global funds have pulled out $24.4 billion from emerging markets over the past 15 weeks, with China-focused funds accounting for nearly $22 billion of outflows, according to a report by Elara Capital. In contrast, developed markets attracted $46 billion of inflows over the past eight weeks, led by a $23 billion inflow into the US, the highest seen in five weeks, and a record $20.2 billion allocation into globally mandated funds.

The widening divergence between EM and DM flows reflects investor preference for liquidity, stability, and defensive positioning as geopolitical uncertainty intensifies following the Iran conflict and persistent crude oil volatility. Elevated oil prices have triggered a broad "risk-off" shift across emerging markets, hurting sentiment toward cyclical and growth-sensitive sectors.

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Global emerging market (GEM) funds also saw $2.6 billion of outflows over the past nine weeks, signaling that the strong EM rally seen between June 2025 and February 2026 is beginning to lose steam. Technology-focused emerging market funds are also beginning to crack under pressure, with EM tech funds witnessing $16 billion of redemptions over the past five weeks.

The report highlighted that the AI-led rally across Taiwan and South Korea is showing early signs of exhaustion, with both markets witnessing slowing flow momentum after a strong run since May 2025. India, however, appears relatively resilient within the broader EM basket for the time. Weekly outflows from India slowed to $274 million, while India-focused funds halted an 11-week redemption streak that had resulted in cumulative outflows of nearly $6 billion since February 2020.

Still, Elara Capital cautioned that there is no meaningful revival in active inflows yet into India. Pressure in India remains concentrated in long-only strategies, which saw outflows of $246 million last week. These were largely offset by ETF inflows from US investors, suggesting that Indian equities continue to rely more on passive allocation support rather than broad-based conviction buying from active global investors.