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.
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Fortun explains why April's rebound in emerging-market inflows gave way to renewed equity selling in May, despite more resilient demand for debt.
View detailsThe June tracker records $26.6 billion in net emerging-market portfolio outflows during May, reversing April's inflows. Equity withdrawals of $37 billion outweighed $10.4 billion in debt investment, with selling in Korea and India driving the Asian reversal. Chinese equities still attracted funds, but Chinese debt lost investment. The note links the June market selloff, stronger US employment and a more hawkish Bank of Japan to tighter prospective liquidity conditions.
Read the workRepeated US current-account deficits have accumulated a stock of financial claims that helps explain today's global imbalances. Global demand for dollar assets keeps the United States at the center of financing, but increasingly private investors respond to yields, hedging costs and policy credibility. The authors argue that tariffs cannot resolve an imbalance rooted in saving, fiscal policy and demand for US assets, while maintaining that financing system may become more expensive.
Read the workThe geopolitical shock reaches beyond oil prices into supply-chain reliability, input costs and financing. Energy-price stabilization would not necessarily remove premiums on gas, fertilizer, shipping and intermediate goods. US consumption, AI investment and energy capacity provide more protection than Europe has, without eliminating exposure. For emerging markets, capital allocation increasingly favors stronger reserves, credible policies and lower energy-import or refinancing risks.
Read the workThe May tracker records a partial recovery from March's emerging-market selloff, with $58.3 billion in portfolio inflows during April. Debt attracted $51.9 billion, mainly outside China, while equities returned to positive flows. Renewed issuance indicated improving market access before the underlying economic shock had dissipated. The note leaves open whether this was lasting normalization or an initial respite constrained by energy costs, inflation and selective financing.
Read the workFortun explains how strategic technology bottlenecks and capital-intensive AI demand support large corporate valuations.
View detailsFortun distinguishes Mexico's recent debt outflows from earlier stress episodes and explains how external shocks interact with weaker domestic growth.
View detailsFortun argues that China's financial-account dynamics make a very large, persistent yuan undervaluation harder to reconcile with the evidence, while allowing for a more moderate misalignment.
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