FPI inflows: Emerging markets yet to gain from global liquidity

The worst quarter for foreign outflows in 20 years marks a divergence between foreign investor activity and liquidity in global markets, generally seen fueling the post-crisis inflows into emerging markets. 

An analysis of indices tracking liquidity in major markets shows conditions remain benign. Both the Bloomberg Euro Area Financial Conditions Index and the Bloomberg U.S. Financial Conditions Index have had largely positive values in recent times. A positive value indicates easy availability of capital.  The average value of the Bloomberg Euro Area Financial Conditions Index since June-end is 0.07, based on month-end values. It is 0.43 for the Bloomberg U.S.