Fundflow Insight ASIA PACIFIC:: Nomura

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Regional funds continued to draw overall net inflows while markets rebounded w-w.
Emerging markets are still preferred ahead of developed markets, per recent flows
and the latest poll. In APxJ, China/India topped fund/foreign inflows. Taiwan saw a
sharp increase (78-week high) in foreign inflows. More on the poll: India/ Indonesia/
Thailand topped Asian equities again, with equities again topping asset classes.





Emerging markets still preferred,
according to flows and poll

 Globally, fund inflows continued (9th week) along with market
rebounds; still stronger inflows into EM regions
For the week of 28 Oct–3 Nov, the MSCI AW rebounded with a rise of 3.6%
w-w — global fund investors injected an overall net US$3.8bn. Of late, APxJ:
US$694mn, DE: US$632mn, EMEA: US$150mn, GEM: US$2.3bn, Int’l:
US$266mn, Japan: -US$145mn, LatAm: US$180mn, Pacific: -US$3mn and
the US: -US$283mn. Inflows into emerging markets were intact and
remained more solid than in developed markets. Inflows have been
particularly consistent among GEM and Latin American funds. It has been a
similar story of late for Developed Europe, but not yet for the US.

 APxJ: broad-based fund/foreign buying — China/India led in
size, foreign inflows in Taiwan up sharply to 78-week high
The MSCI APxJ rebounded 3.6% w-w along with continuing inflows (ninth
consecutive — US$694mn/US$3.5bn from fund/foreign investors. By market,
China/India (marginally ahead of Taiwan) topped the region for the largest
fund/foreign inflows. Taiwan experienced a sharp pick-up in foreign buying
again, with the latest marking a 78-week high. Foreign selling in Korea
prevailed for the first time in seven weeks, though the amount was modest.

 Japan: selling continued (sixth week) via fund investors
Fund investors were sellers to the tune of a net US$145mn, while the MSCI
Japan was down 1.6% w-w. The latest weekly selling is the sixth in a row.

 Fund poll: equities/non-Asian emerging markets/India &
Indonesia & Thailand top asset classes/global/Asian equities
In a fund poll released on 29 October, equities continued to top asset
classes. Non-Asian emerging markets topped global equities on a recent
upgrade. India, Indonesia and Thailand once again topped Asian equities.


Watch for a shift away from emerging to developed markets
Unwinding of money market funds has seen equity markets rally since
March 2009. We expect further unwinding to be limited and flag a possible
shift in preference away from emerging markets (APxJ could be hit) on an
improved economic outlook, given emerging markets have benefited from a
stronger return of inflows and performance than developed markets. We
have not yet seen solid signs of such a shift.