The Turkish currency crisis caused a sharp slowdown in non-resident fund flows into emerging markets (EM) in August, the Institute of International Finance (IIF) said in a note on September 5.

Portfolio inflows to EMs slowed to $2.2bn in August from $13.7bn in July, IIF said, according to its “IIF Capital Flows Tracker.”

Equity markets experienced a net gain with over $7bn in non-resident inflows, of which China took $5.8bn. However there was a net outflow from EM debt markets, which shed $4.8bn in total.

Regionally, EM Asia attracted the most combined equity and debt inflows ($8.4bn), primarily due to China and over $2bn of debt inflows to Thailand. Other regions did not fare so well. Flows to EM Europe were nearly flat, while Latin America and Africa and the Middle East experienced outflows of $3.1bn and $3.2bn, respectively.

“Flows to Latin America were depressed by the ongoing crisis in Argentina, political uncertainty in Brazil, and concerns about trade ties to the US and China amidst ongoing trade negotiations – as well as the prospect of a slowing Chinese economy,” Stephan Imre of Raiffeisen Bank (RZB) said in a note.

Russia has been particularly hard hit by both the nerves associated with the Turkish crisis amongst EM investors, but more so by the US government threat to impose “crushing” sanctions on Russia this autumn. Investors have been selling off the local treasury bills, the OFZ, and the share of foreign holdings of the bonds has fallen from a peak of 34% to 27% as of July.

In its latest results Moscow Exchange (MOEX) reported that trading volumes on its bourse were high in August. Equity trading volumes were up 10% m/m, while fixed income volumes were up 2% m/m, but derivative trading volumes jumped 24% in the same period as investors sought to hedge against an increasingly volatile ruble.

IIF reported that Russia saw a net outflow of $11.3bn in 1Q18, rising to -$22.9bn in 2Q18, with outflows on a monthly basis of -$9.1bn in April, -$7.5bn May and -$8.3bn in June to make a total of -$42.5bn of outflows over the first six months of this year. That compares with a net outflow of only -$13.1bn for all of 2017, according to IIF.