Investors pour into Chinese stocks, bonds lifting March EM capital flows - IIF

LONDON (Reuters) - Investors ploughing into Chinese stocks and bonds lifted emerging market portfolio flows for a third straight month in March, data from the Institute of International Finance (IIF) showed on Thursday.

Overall, investors put $9.4 billion into emerging markets, including $6.8 billion into stocks and $2.6 billion into debt securities.

The combined monthly figure, while positive, is the lowest of 2023, showing cooling enthusiasm for emerging market investments as central bank rate hikes worldwide aimed at tackling inflation increased funding costs for debt.

GRAPHIC - IIF March portfolio flows

https://fingfx.thomsonreuters.com/gfx/mkt/myvmojoygvr/IIFMarchportfolioflows.PNG

Flows into Chinese stocks more than doubled from February to $7.2 billion, bringing total investment into Chinese equities this year to $30 billion, with the removal of COVID-19 restrictions still boosting markets.

Money going into Chinese debt also rose, to $3 billion, from $800 million in February.

But emerging markets outside China saw outflows of $500 million from equities and $400 million from bonds.

"Markets have begun to take a more cautious approach to developing-market assets as an early-year rally fades and a soft landing for the global economy appears," IIF economist Jonathan Fortun said in a statement.

"We see a crowding out effect from EM debt, with juicy yields available in more mature markets, the incentive is lower for investors to take on extra risk," he added.

(Reporting by Libby George, editing by Karin Strohecker and Susan Fenton)