Wednesday, October 21, 2009

>Asian Equity Funds The Unloved Ones (CITI)

Foreign liquidity remains buoyant but Asian dedicated equity funds not benefiting — Inflows to EM and Global/International equity funds continued running at billions of dollars for the fifth week since September, yet Asian funds reported outflows. Based on the 1,000 Asian funds tracked by EPFR on a weekly basis, flows turned marginally negative last week to US$37m of outflows compared with small inflows of US$59m two weeks ago.

YTD net inflows to Asian funds total US$14b — This covers 71% of the money redeemed in 2008 and contrasts to US$20.4b of fresh money to GEM funds, which is 2.2x last year’s outflows. GEM funds continue to be liked by foreign investors and new money taken in last week remained US$1b+ vs. an initial sign of weakening inflows to Global/International funds (halved for two consecutive weeks to less than US$500m last week). Pacific funds saw inflows for the first time in five weeks after the RBA surprised by raising interest rates on Tuesday.

Out of Greater China into India, Korea and TIP — Outflows from China, Hong Kong, Taiwan and Greater China regional funds added up to US$366m last week. By contrast, inflows to India, Indonesia, Korea and Thailand totaled US$304m, the largest in ten weeks. Relative to the size of assets under management (AUM), inflows to Thailand and Indonesia were the strongest, representing 12%-13% of corresponding AUM vs. 0.5% for India funds where inflows were the biggest in dollar amounts.

To see the full report: FUN WITH FLOWS