New York: After a thorny few years, emerging market bonds and equities are on track for another year of outflows driven by slowing global growth and corporate indebtedness, according to the Institute of International Finance.

Emerging markets had net capital outflows of $735 billion in 2015, up from $111 billion in 2014 and more than previously forecast, and are expected to see $448 billion of outflows including errors and omissions in 2016, a report released on Wednesday by the IIF said.

The Washington-based group, an authoritative source of data on investment flows to and from the developing world, said heavy outflows from China, which reflect currency and growth worries, were the driving factor behind the losses in 2015. China had $676 billion in outflows in 2015, according to IIF.

The Chinese economy grew at its weakest pace in a quarter of a century last year, raising hopes Beijing would cushion the slowdown with more stimulus policies, which in turn prompted a rally on the country’s roller coaster share markets.

“But the weakness extends well beyond China as we have seen persistent portfolio outflows out of a broad range of emerging markets, with investors increasingly worried about growth prospects and high corporate indebtedness,” said Charles Collyns, managing director and chief economist at the IIF.

The organisation said Turkey, Brazil and South Africa are some of the countries most vulnerable to continued retrenchment in emerging markets because of weakness in macro policy, high levels of foreign exchange corporate indebtedness and significant current account deficits.

There are some bright spots such as India and Mexico. But with China fears on the rise and Brazil and Russia in recession for the second straight year, investment returns across the sector are unlikely to recover soon, many fear.

“Premature ageing of emerging markets may continue to weigh on growth prospects, and market volatility in early 2016 has weighed on risk appetite,” said Hung Tran, executive managing director at the IIF.

While many investors have said emerging markets will be affected by the US Federal Reserve beginning a cycle of interest rate increases, the IIF expects the impact of a Fed/stightening cycle to be limited.

“The impact of the Fed’s shift to a tightening cycle may be limited as long as it is gradual, but flows to EMs will continue to face headwinds from growth and debt concerns,” the IIF’s statement said.

While emerging market equity and bond markets are trading at discounts compared to developed markets, which some investors may view as a compelling reason to invest, poor fundamentals will likely keep most investors away, the report said.

The IIF’s projections are based on its group of 30 emerging market economies.