Cross-Border Portfolio Investment Inflows to Emerging Countries: Enhanced Dominance of Local Factors amid the COVID-19 Pandemic

Analysing the determinants of cross-border portfolio investment inflows to 17 emerging countries in 2012–2020, this study supports a global financial cycle hypothesis stressing the dominant role played by global factors in those inflows. In the amidCOVID-19 period of 2020, such dominance decreased mainly through global real business factors. The relative dominance of local factors increased then. Increases of short-term interest rates and mitigations of sovereign risks in the countries were more greatly associated with discouraging global investors from selling local securities in the pandemic period than before. © 2022, AfricaGrowth Institute. All rights reserved.