NEW YORK (BLOOMBERG) - China has seen investors pull money out of the country on an "unprecedented" scale since Russia invaded Ukraine in late February, marking a "very unusual" shift in global capital flows in emerging markets, according to the Institute of International Finance (IIF).

High-frequency data detected large portfolio outflows from Chinese stocks and bonds, even as flows to other emerging markets held up, the IIF wrote in a report on Thursday (March 24).

"Outflows from China on the scale and intensity we are seeing are unprecedented, especially since we are not seeing similar outflows from the rest of emerging markets," IIF chief economist Robin Brooks and his colleagues wrote.

"The timing of outflows - which built after Russia's invasion of Ukraine - suggests foreign investors may be looking at China in a new light, though it is premature to draw any definitive conclusions in this regard."

Official data showed that foreign investors reduced their holdings of Chinese government bonds by the most on record in February, in part as the Russia-Ukraine war spurred redemptions among global fixed income investors. Sanctions have frozen the Russian central bank's foreign reserves held in euros and US dollars, leading to speculation that Moscow may sell its holding of Chinese assets to raise funds.

The Chinese stock market also tumbled earlier this month as overseas investors retreated, partly on concern that the United States and European Union sanctions on Russia may somehow spill over to China. The stock market has recovered since last week as policymakers pledged to support capital markets.

Mr Padhraic Garvey, head of global debt and rate strategy at ING Financial Markets, said it is too early to say if it is a trend. He said the outflows may indicate that some investors decided not to reinvest bond proceeds until "greater clarity emerged on the Russia crisis".

"Often such flows can be driven by redemptions not being matched by new money as a constant flow of new money is required just to stay invested, in particular in bonds," he said. "It could well be that net inflows resume in the weeks and months ahead."