The last time emerging markets had it nearly this bad, Ronald Reagan was the U.S. President, KKR purchased RJR Nabisco, and a future popstar named Rihanna was born.
Net capital flows for global emerging markets will be negative in 2015, the first time that has happened since 1988, the Institute of International Finance (IIF) said in its latest report. Net outflows for the year are projected at $541 billion, driven by a sustained slowdown in EM growth and uncertainty about China, it added.
In other words, investors will pull out more money out of emerging markets than they will pump in.
The data come on the heels of a separate IIF report this week that showed portfolio capital outflows in EMs amounted to $40 billion during the third quarter, the worst performance since 2008.
Indeed, relief from the Federal Reserve's decision to delay its first interest rate hike in a decade has proved to be short-lived for EMs amid fresh evidence of a slowing Chinese economy, precipitous currency declines, a sustained slide in commodity prices, and political uncertainty in countries such as Brazil and Turkey.
Covering a group of 30 economies, the IIF report estimates net non-resident inflows at $548 billion for 2015 from $1,074 billion last year—levels not seen since the global financial crisis.
"As a share of gross domestic product (GDP), non-resident inflows have fallen to about 2 percent from a record high of almost 8 percent in 2007."
The situation is exacerbated by the fact that investors residing in emerging market countries are buying more foreign assets. Known as resident outward investment flows, 2015's reading is expected to hit a historical high of $1,089 billion, which is likely to further pressurize reserves, exchange rates and asset prices of EMs, the IIF said.
"On a net basis, lower inflows and rising outflows imply that private capital is leaving EMs for the first time since the early 1980s."
So, which region is the weakest? No surprises here.
"It is noteworthy that a large part of the decline in overall flows this year is attributable to flows out of China, which intensified after the People's Bank of China announced a mini-devaluation of the renminbi and a shift to a more market-oriented exchange rate fixing regime in August."