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Emerging markets see 7th straight month of foreign capital inflows

NEW YORK, June 30 (Reuters) - Emerging market portfolios saw $17.8 billion of net non-resident portfolio flows in June, marking the seventh straight month of positive foreign inflows to the asset class, the longest streak since late 2014, a banking survey showed on Friday.

The Institute for International Finance estimates that total inflows in June were down slightly from $20.2 billion in May, with about $13 billion flowing into debt and $5 billion to equity markets, respectively.

"We remain cautiously optimistic on the overall outlook for EM capital flows given the very shallow pace of Fed tightening expected by markets well below the Fed dots but cognizant of potential headwinds," IIF said in a statement.

Regionally, emerging markets in Asia were responsible for the lion's share of all inflows in June, drawing $15.8 billion in combined equity and debt, with debt inflows to India playing a large role. Asia was followed by EM Europe, with $2.0 billion, while a modest bump in Latin American of $0.6 billion offset a similar drop in Africa and the Middle East of $-0.5 billion.

May marked the strongest pace of emerging markets net capital inflows, excluding China, since the U.S. election, rising to $16.5 billion. That was up from $2.5 billion in April. IIF reported that the strong upswing was mainly driven by robust inflows to Turkey, at $9.2 billion, India with $9 billion, and Mexico, at $2.3 billion. In contrast, net capital flows to Brazil turned negative in May, IIF said, hurt by a sharp contraction in non-resident capital inflows.

On May 17, secret recordings of Brazilian President Michel Temer were released that alleged Temer was discussing a bribery plot with Joesley Batista, chairman of the countrys largest meat-packing firm JBS, to pay a monthly allowance to former House Speaker Eduardo Cunha.

Brazil's benchmark Bovespa stock exchange, real currency and government bonds all sold off following the news. (Reporting by Dion Rabouin; Editing by Chizu Nomiyama)