China must watch out for risk of capital outflows

Emerging markets are likely to see large amounts of money leaving, given changes in the global economic climate. Since last year, developed countries and emerging market economies have had to face a reversal of the economic climate that followed the worldwide financial crisis.

Especially in the wake of the United States' retreat from quantitative easing and the appreciation of the dollar, emerging market economies have been subject to serious net capital outflows - more serious, in fact, than during the crisis.

The net capital outflow in the 15 largest emerging economies amounted to $600 billion during the three quarters before the end of March, according to estimates by NN Investment Partners. The net capital outflow was only $545 billion during the three quarters before the end of March 2009, which were also the worst months of the financial crisis. This shows that the market's confidence in some of the largest developing countries is very weak.