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Emerging Markets Monthly Highlights: External Environment Is Becoming More Difficult

Emerging markets (EMs) have been experiencing significant net portfolio outflows over the past few months. Tightening financing conditions, expectations of economic slowdown in developed economies, as well as geopolitics are all contributing to portfolio outflows from EMs, and particularly, from China. External environment for EMs is currently worsening, and we expect pressures on EM assets to remain. A more polarized political landscape in some EMs also magnifies uncertainty, potentially amplifying capital outflows.