Fund Flow Tracker Bulls back in the China shop; exit India? Macquarie

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Fund Flow Tracker
Bulls back in the China shop


Fund flow data: China drives regional subscriptions

􀂃 China inflows surge… Unlike recent weeks where inflows have been broadly
positive for most countries, this week China-focussed funds were the main
recipient of inflows, while many other country products saw small outflows.
Inflows to China-focussed funds returned to more than US$350m -- their
highest level in 10 weeks. Greater China funds (which also include Hong
Kong and Taiwan) also saw positive subscriptions, but at less than
US$100mn (significantly below recent weeks’ US$200+mn levels). Korea,
Indonesia and Asian-regional benchmarked funds did receive positive inflows,
but at levels below year-to-date averages.


􀂃 …but redemptions hit other countries: With Indian stocks having
underperformed the broader Asia ex-Japan region in November, India funds
received their first weekly outflow in over a month – at levels not seen since
February. Outflows from Malaysia-, Thailand- and Hong Kong-dedicated
funds all continued for the second week in a row, with Malaysia redemptions
in particular accelerating WoW to their highest level since 2008. Taiwan also
saw outflows over the last week, but at moderate rates.

􀂃 GEM funds’ recent redemptions reversed: Last week’s net redemption
from GEM funds (the first in over 6 months) has already reversed to positive
subscriptions – enough to overcome the previous weekly loss. In the
developed market space, Australia-, New Zealand-, and Asia Pacificfocussed
funds all saw net inflows, whereas Japan funds saw a reacceleration
in redemptions, now in their ninth consecutive week.

􀂃 Regional portfolio positioning changing slowly: EPFR’s latest (ie Octoberend)
portfolio positioning survey suggests that Asia ex-Japan institutional
investors’ relative holdings (vs the benchmark) increased in China, Indonesia,
the Philippines, Thailand, Malaysia, and Singapore. By contrast, investors’
weightings fell vs Hong Kong, India, Korea and Taiwan benchmark levels.
Local exchange data: Foreigners right back on the horse

􀂃 Foreign buyers return everywhere except the Philippines: Despite early
November’s increase in risk aversion, we note that in the end only a single
week of net foreign equity selling was actually recorded across the aggregate
of the six Asia ex-Japan markets that report such high-frequency data.
Foreign net-buying returned this week, albeit at relatively low levels,
compared to the YTD average – with Taiwan, Thailand, Korea, Indonesia and
India all recording net foreign equity purchases. Only the Philippines reported
continued foreign net-sales.

􀂃 Frontier markets continuing to attract buyers: Vietnam and Pakistan are
continuing to receive foreign net-buying of equities, offsetting the foreign netselling
that has characterised the Sri Lankan market, following the closure of
Galleon Group in October 2009 (and subsequent liquidation of its positions).