>FUN WITH FLOWS (CITI)

The Flood Continues

■ Current inflow cycle the longest since the unfolding of Asian bear markets in 2007 — New money to Asian equity funds rose further from US$1.6b two weeks ago to US$1.9b last week. This is the most sustained inflows (10 weeks so far) since November 2007, and in dollar terms average weekly inflows in the past month are now 2.5 standard deviations above historical averages, the biggest since the beginning of the bear market.

■ As investor risk appetite resumes, money to developed market funds lags — While net cash taken in by all dedicated Emerging Market (EM) equity funds was US$3.6b/week over the last two weeks, Global fund inflows averaged only US$760m/week. Year-to-date, net inflows to all EM funds have been US$17.7b versus net outflows of US$4.6bn for Global equity funds. The cheap money, looking for higher returns, explains why Asian markets have gone from 1x book
value to 1.7x in just three months.

■ Money chasing Taiwan equity funds, Singapore funds finally gaining traction — Comparing to average weekly inflows between 9 April and 6 May, new money to Taiwan funds tripled to US$378m last week, or 11.4% of their AUM. Singapore equity funds, having been unloved for a while, finally gained traction from overseas investors with inflows last week the largest since May 2008. That said, it is the only fund group for which net flows are negative year-to-date.


To see full report: FUN WITH FLOWS