Capital flows explained: how cross border investment is measured, what drives emerging market flows, and Jonathan Fortun’s research on currencies and financing conditions.
Capital flows connect investment decisions in one economy with financing conditions in another. This page brings together an introduction to their measurement and Jonathan Fortun’s research on emerging markets, exchange rates and the transmission of global financial conditions. The publication archive below links to the original work and distinguishes authored research from media commentary.
Capital flows are cross border financial transactions: for example, an investor buying another country’s bonds, a company financing an overseas operation or a bank making a foreign loan. The category matters. Direct investment, portfolio investment and bank related flows describe different relationships and can behave differently. A portfolio flow estimate is therefore not a measure of every form of international financing.
A useful first question is whose activity a number describes. Nonresident purchases of domestic assets and residents’ purchases of foreign assets are different sides of the external financial relationship. Even a series called “inflows” may already subtract sales from purchases within its category. Read its definition before comparing it with a net flow total.
A flow covers a period; a stock describes a position at a date. A change in the value of foreign holdings can reflect prices and exchange rates as well as transactions. It should not automatically be interpreted as new money entering or leaving a country.
Country definitions also matter. Residence locates an entity in an economy; nationality can group it with the country of its controlling parent. The BIS explanation of residence and nationality shows why the two perspectives answer different questions. Before comparing regional totals, check which countries, investors and instruments are included.
Analysis often separates global “push” factors, such as international financial conditions, from domestic “pull” factors, such as an economy’s outlook and institutions. Their relative importance can change across periods and types of investment. The IMF literature survey on capital flow determinants provides a starting point for this distinction.
For a particular episode, the analytical task is to connect the financing decision to the receiving economy. Is a change broad across markets or concentrated in a few countries? Does it concern equity or debt? Does the adjustment appear in an exchange rate, a borrowing cost or the quantity of financing available? These questions are more informative than treating every rise in inflows as the same economic event.
High frequency indicators can help track developments before full balance of payments statistics arrive. Their coverage and construction differ, so they are not interchangeable. The IMF guide to capital flow data discusses these measurement differences and the use of timely portfolio flow proxies.
For any release, identify its observation period, publication date, country universe and revision policy. Compare like with like: a monthly estimate with another monthly estimate, and the same investment category with itself. When a source revises history, retain the distinction between the original reading and the latest estimate. A timely signal can be useful without being a complete picture.
Bond issuance describes securities being created; investor flow measures describe investment transactions. Gross issuance can include refinancing. Net issuance deducts redemptions, as set out in the BIS securities glossary. Neither number alone establishes who bought the bonds or the economy’s total net capital inflow.
Jonathan Fortun’s work connects portfolio allocation with exchange rates, external balances and financing conditions. Follow the dated publications and commentary below for the argument and evidence behind a specific episode. Institutional research retains its publisher and coauthors; a journalist quoting Jonathan remains the author of that reporting.
The Japan research theme examines another perspective on international capital allocation. The Bolivia economy theme follows monetary and foreign exchange constraints in a receiving economy. The professional biography connects these interests, and the press kit provides attribution for interviews and introductions. This reference page does not redistribute the IIF’s underlying datasets.
295 results
Bloomberg examines US interests surrounding coordinated support for the yen. Jonathan Fortun questions whether the intervention is simply a diplomatic gesture and points to broader American interests in helping Japan support its currency.
View detailsAfter coordinated US-Japan intervention, the note estimates a medium-term yen equilibrium range of 125–138 per dollar, stronger than the market rate near 157. It distinguishes the model's unadjusted signal from a more conservative undervaluation estimate and shows how investment income retained abroad limits currency-market demand. Intervention may alter near-term risks, but sustained convergence would depend on a better policy mix rather than repeated currency purchases.
Read the workAI is reshaping international trade and capital allocation before its productivity gains are established, the authors argue. Their analysis distinguishes supplying chips and equipment from owning platforms and intellectual property that earn recurring income. Emerging economies may gain productivity through adoption while still paying more for imported hardware and digital services. Building exportable digital capacity could instead attract lasting investment and improve external balances.
Read the workReuters reports that emerging markets saw $46.1 billion in net foreign equity outflows in June, led by South Korea and Taiwan, even as bonds drew $28.3 billion. Jonathan Fortun, IIF chief economist, wrote in the monthly report that investors remain willing to lend to emerging markets but are less willing to add broad equity risk. He attributed the equity cuts to higher global discount rates, China uncertainty, weaker earnings confidence and tech and energy positioning.
View detailsFortun explains the divergence between continued lending to emerging markets and reduced equity exposure, as selling in South Korea and Taiwan drives June's outflows.
View detailsThe July tracker reports a $17.8 billion net portfolio outflow from emerging markets in June: $28.3 billion of debt inflows were outweighed by $46.1 billion of equity withdrawals. Asian equity selling drove the overall result, while Chinese equities also became a drag. Strong sovereign issuance contrasts with the equity weakness. The note identifies a more hawkish Federal Reserve and renewed oil volatility as risks to dollar liquidity and emerging-market investment.
Read the workBloomberg Línea reports that Bolivia ended 15 years of a fixed exchange rate and moved to a managed flexible regime. Jonathan Fortun of the IIF explained how the new official rate will be calculated from bank dollar purchases, and cautioned that it is not a clean float because banks cannot sell above that rate plus Bs 0.10. He warned that the margin cannot fix a dollar shortage, and said the key test is whether people can actually buy dollars at that price.
View detailsFinancing the United States' role as a destination for global savings is becoming more costly, the authors argue. Its investment-income advantage is narrowing as market-priced portfolio liabilities become more important and respond to interest rates, valuations and hedging costs. Institutional portfolios increasingly channel savings into US assets. The dollar's central position persists, while the income-account cost of supplying those assets grows.
Read the work