Emerging markets bonds and equities attracted an estimated $37.7bn (£30.8bn) in non-resident net inflows in September after investors pulled $13.9bn (£11.4bn) during the previous month, reflecting the “pendular nature of flows during 2019”.
The Institute of International Finance's (IFF) Capital Flows Tracker found emerging markets equities and debt saw $10.3bn and $27.6bn of net inflows respectively in August.
Emerging markets securities flows have been volatile in 2019, primarily as a result of US-China trade tensions, which "in May caused a rapid deterioration in global risk appetite, resulting in an important outflow episode", the report said.
Sentiment towards emerging markets asset classes improved in June, but as trade tensions reignited August became "one of the worst performing months for EM portfolio flows", according to IFF, with 18 out of 21 days seeing negative flows.
Improved sentiment was best reflected in China itself, with equity flows of $9.2bn up from $1.6bn in the previous month. Meanwhile its debt inflows reached $27.6bn.
IFF said: "We believe the outlook for equity flows to non-China EM remains difficult given the large amount of hot money that has already gone to EM in recent years, which we see as having resulted in a positioning overhang, a structural drag on new inflows."
On a regional basis, there were universally positive net flows in both equities and debt. Emerging Asia, Latin America, EM Europe and the Africa and Middle East (AFME) region saw net debt inflows of $13.3bn, $6.3bn, $4.0bn and $3.9bn respectively.
Meanwhile, EM Asia saw the largest net equity inflows of $9bn - explained mainly by $9bn of net inflows to China - with the other regions seeing marginal gains.