In this respect, it is important to bear in mind that the abundant liquidity resulting from overly expansionary monetary policies in AEs is anticipated to decline significantly in coming years. Another change is the increased presence of foreign investors in local EME bond markets.
It is true that the level of risk is a function of the type of investor, with large institutional investors showing in general a higher degree of stability. It is also the case that at the end, both foreign and domestic investors will have a similar reaction to episodes of acute turmoil.