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Hedge fund leverage raises emerging market risks as global capital flows reverse

Reported · Written up by our desk · Equity Funds

Rising hedge fund leverage and crowded investment positions could amplify financial instability across emerging markets, as weakening global risk appetite and renewed monetary tightening trigger capital outflows, according to analysis by Research Fellow Iván Weigandi. Emerging markets have demonstrated resilience throughout much of 2026 despite higher global interest rates and energy price volatility, supported by strong equity valuations and investor optimism surrounding artificial intelligence. Foreign investors allocated $246bn to emerging market bonds between January and September, partial

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