Macquarie Research, Fund Flow Tracker -North by Northeast

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Fund Flow Tracker
North by Northeast
Local Exchange Data: Northward shift continues
􀂃 Sustained buying in Taiwan and Korea. Although foreign net-buying slowed
during the week ending December 22 for the aggregate of six Asia ex-Japan
markets where high-frequency local exchange data is available – to US$920m
vs. US$1.69bn the week before – a rotation into Northeast Asia (Korea and
Taiwan) remains evident.

􀂃 Specifically, Korea recorded positive US$686m in weekly foreign net-buying
despite sustained tension on the Peninsula, and Taiwan recorded US$473m
in net-buying. These were both down by roughly half from the previous week’s
respective US$1.21bn and US$906m in net-buys; but this compares to net
selling by foreigners across all the TIPs markets (Thailand, Indonesia and the
Philippines), while India received only slight positive net-buying, at US$12.2m.
􀂃 Slipping TIPs. Indonesia and Thailand experienced the largest foreign netselling
in the region, with Indonesian net-selling of US$128m undoing the
previous week’s US$107m of net-buying; Thailand’s foreign net-selling of
US$94m more than undid the previous week’s US$28m of net-buying. And
foreign net-selling continued for the second week in the Philippines, with
liquidation of US$30m after the previous week’s US$55m in net sales.
􀂃 Frontier appetite still a vote of confidence for risk. Continued appetite for
Asia’s Frontier Markets suggests the above-noted selling in TIPs may be
more of a portfolio rotation exercise than a straightforward flight from risk:
Vietnam and Pakistan both continued to record positive – albeit softer –
foreign net-buying. This marks the 39th consecutive week of net-buying for
Vietnam, and foreign buying in that market YTD has amounted to no less than
20% of current market capitalization!
Fund Subscription Data: Redemptions sap managers’ cash
􀂃 Developed Asia: Japan subscriptions still positive but lower. Japan funds
saw weaker but still-positive inflows this week of US$83.6m -- below the YTD
average -- while Asia Pacific-focused funds (which include Australia and New
Zealand) recorded net redemptions of US$166.9m.
􀂃 Emerging Asia: country-fund redemptions across the board. Panregional
Asia ex-Japan funds received a pick-up in weekly net subscriptions to
US$217m from just US$11.4m one week earlier. But single-country funds
across the region almost all suffered redemptions, totalling a larger US$680m.
At the single-country level, only Vietnam- and Philippine-dedicated funds
continued to receive weekly net subscriptions.
􀂃 China and India funds the key driver of redemptions. China-focused funds
recorded their third consecutive week of redemptions, at US$151m (alone
accounting for roughly one-third of the above-noted US$464m regional total),
while India-dedicated funds received weekly net redemptions of slightly less at
US$132m. ‘Greater China’ and Taiwan-dedicated funds both suffered
accelerating redemptions WoW, while Hong Kong-focused funds experienced
net-redemptions for the first time this month.