>Strong Equity Issuance Hindering Asian Fund Inflows (CITI)

■ Asian fund inflows still lagging — As per EPFR, US$781m of new money to offshore Asian funds last week was less than one-third of the inflows to GEM funds, 37% below Global funds and even 10% smaller than the amount taken in by Latin American funds whose AUM are just one-fourth of Asian funds. August-to-date, net inflows to Asian funds have been US$2.1b, much lower than the US$8.6b to GEM funds and US$13b to Global equity funds.

■ Strong issuance in Asia ex holding back inflows to equity funds — Asian fund inflows have been lagging those to other emerging market funds since August but equity issuance in this region is the strongest of all. Over last three months total cash calls (both IPOs and secondaries) reached US$54b in Asia ex, which was 3.6x the fund raised in Latin America, Emerging Europe, Middle East and South Africa altogether.

■ Asian fund inflows likely to pick up given inflows to GEM funds are close to a peak — Although Asian equity issuance in the pipeline remains big and should continue to absorb excess liquidity in the markets, we see possible money flows coming from GEM to Asian funds. As per figure 3, inflows to GEM funds are close to their previous peak in Oct 2007 and if it starts weakening, Asian funds may benefit.

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