>Fun with Flows (CITI)

● Inflows to Asian funds resumed — With hopes that China could lead the global economy out of recession, foreign investors have put new money into China related equity funds. As per the latest EPFR data, net inflows to China and Greater China funds totaled US$271m last week, the biggest net inflow in two months. Excluding these, net redemptions from other Asian funds continued, albeit with reduced outflows (US$178m vs. US$687m in the prior week).

● Flows to Taiwan funds turned positive for the first time in eight weeks — The fact that Taiwan continues to be the best performing market in Asia YTD has finally gained some traction from overseas investors and moderate inflows were reported last week. Korea, the other market we like, saw outflows decelerate for the first time in four weeks when the KOSPI outperformed. Indeed, foreign investors turned net buyers in the Korea market, while net purchases by local institutions quadrupled during the period.

● Redemption pressure sustained amongst other regional fund groups — While inflows to Asian and GEM funds resumed last week (both with China exposures), other emerging market funds continued to face outflows. In addition, International equity fund redemptions remained at billions of dollars. Year-to-date, total net outflows from this category have risen to US$7.7b, up 93% year-on-year.

To see full report: FUN WITH FLOWS