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Following the sharpest outflows in 18 months in
December, portfolio inflows in January were expected to tally
$18 billion, with bond investment rising to $14 billion and $4
billion going into stocks, the Washington-based finance industry
body said in its monthly report.
"Portfolio flows have rebounded in January to more normal
levels, after sizeable outflows in December," IIF chief
economist Charles Collyns said in the report published late on
Tuesday.
"Investor interest in emerging markets has benefited from the
further scaling back of market expectations for Fed policy rate
hikes and by the ECB's announcement of an expanded, open-ended
quantitative easing program."
The Fed's first two-day policy meeting of the year concludes
later on Wednesday, with doubts growing about expectations that
it can tighten monetary policy by mid-year. A strengthening
dollar and falling oil prices are adding to worries that
inflation readings remain too low.
Low inflation supported the European Central Bank's decision
last week to embark on a government bond-buying program which
will pump hundreds of billions in new money into a sagging euro
zone economy.
IIF data showed the rebound did not reach all regions. The
recovery was at its strongest in Latin America, followed by
Asia, while foreign portfolio capital flowed out of emerging
Europe for a second straight month.
In the past year, Europe recorded outflows in six out of 12
months, compared to one in Latin America and none in Asia.
(Reporting by Karin Strohecker; Editing by Ruth Pitchford)
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