UPDATE 1-Foreign investors downloaded $ 12.3 billion in emerging market assets in May -IIF



* The mbad sale of EM last month saw foreigners throw away $ 12.3 billion

* Liquidation divided between bonds and shares

* The index points to the expansion of mbad selling in all countries

] * Capital flows still holding up in April (Adds additional details, charts)

By Marc Jones

LONDON, June 5 (Reuters) – A strong sell-off from emerging markets last month saw foreigners throwing a combination of $ 12.3 billion of bonds and shares, Institute of International Finance figures showed on Tuesday.

Outflows were equitably split between debt and equities, while regionally the biggest moves were $ 8 billion outside of Asia and $ 4.7 billion from Africa and the Middle East combined, he said.

It was also sold at the end of April, making it the second largest sale for emerging markets in IIF registrations. The longest followed the election of US President Donald Trump in November 2016.

"No single driver of EM badet disposals stands out," the IIF badysts said in their report.

"It seems that there is a combination of factors: idiosyncratic domestic tensions such as financing pressures in Argentina and Turkey or the truckers' strike in Brazil, renewed tariff threats in the US and retaliatory actions, and uncertainty politics in Italy and Spain. "

In a context of higher global borrowing costs and a stronger dollar, there is also evidence that the slowdown in sentiment is affecting a wider range of EM countries.

Year-to-date portfolio flows remain positive at about $ 46 billion, but this represents a sharp slowdown from the $ 134 billion recorded during the same period of 2017.

An IIF index, That qualifies the number of emerging economies where foreigners are selling badets compared to buying them, now it is also lower than after the Trump elections and in 2013, when they were scared with signs that the United States Federal Reserve planned to reduce the stimulus.

The only points that the index is now higher than after the peak of the financial crisis and after the surprise devaluation of China in 2015.

But a broader measure of confidence of foreign investors, which includes Capital investment in properties, factories or other badets is more encouraging for emerging market investors.

This type of data comes with a greater delay, but the IIF calculated that net capital flows in emerging markets reached $ 32 billion in April, well above average flows of $ 7 billion per month of 2017.

It also brings net inflows of capital to $ 110 billion during the first four months of 2018, versus $ 37 billion during the same period in 2017.

Net flows to Turkey were $ 10 billion in April and around $ 8 billion in Mexico were at their highest point since January 2015.

Flows to Brazil were muted, while those from Argentina and India became negative for the first time since May. of 2017 and February of 2016, respectively.

The IIF also calculated that a 10 percent appreciation in the weighted trade value of the US dollar would cut annual net capital inflows to emerging markets by about $ 95 billion.

"A lot will depend on how the global trade landscape evolves," said the IIF badysts.

Report by Marc Jones; edition of John Stonestreet and
Alexander Smith

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