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We estimate that flows linked to exchange traded funds (ETFs) have contributed to half of
the net foreign selling of Indian equities year to date. Excluding ETF-related flows, ytd net
foreign selling of around US$900m compares to net foreign buying of US$25.6bn in 2010.
ETF-linked flows account for half of net foreign selling of Indian equities ytd
We estimate that ETF-linked selling reached US$845m between 1 January and 11 February
2011 (ytd), or half of the US$1.7bn net selling by foreign institutional investors (FII) in this
period. ETF-linked flows contributed to US$3.7bn of net inflows into Indian equities in CY10,
accounting for 13% of the total FII inflows of US$29.3bn.
Emerging market ETF-linked flows are the key outflow drivers year to date
We estimate that emerging market ETF-linked flows have lead to outflows of US$627m from
the Indian market ytd, or 74% of total ETF-linked outflows. In 2010, emerging market ETFs
accounted for 55% of total ETF-linked inflows.
Hardly any selling ytd excluding ETF-linked flows
Excluding the impact of ETF-linked flows, FIIs have only sold US$861m worth of Indian
equities ytd compared to net buying of US$25.6bn in 2010. This lack of net selling by FIIs
(excluding ETFs) is a factor preventing us from becoming more positive on Indian equity
markets despite the downtick in food inflation readings (see our note Primary food prices back to
Nov levels, dated 17 February 2011).
What is our methodology? Track the change in ETF share count
Trading of EEM US (iShares MSCI Emerging Markets Index fund) averages US$3bn daily.
However, selling or buying on the underlying emerging market exchanges happens only when
there is a change in the ETF share count – ie, units are created or extinguished. We track the
changes in share counts for key emerging market-, Asian- and India-specific ETFs to derive ETFlinked
flows.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We estimate that flows linked to exchange traded funds (ETFs) have contributed to half of
the net foreign selling of Indian equities year to date. Excluding ETF-related flows, ytd net
foreign selling of around US$900m compares to net foreign buying of US$25.6bn in 2010.
ETF-linked flows account for half of net foreign selling of Indian equities ytd
We estimate that ETF-linked selling reached US$845m between 1 January and 11 February
2011 (ytd), or half of the US$1.7bn net selling by foreign institutional investors (FII) in this
period. ETF-linked flows contributed to US$3.7bn of net inflows into Indian equities in CY10,
accounting for 13% of the total FII inflows of US$29.3bn.
Emerging market ETF-linked flows are the key outflow drivers year to date
We estimate that emerging market ETF-linked flows have lead to outflows of US$627m from
the Indian market ytd, or 74% of total ETF-linked outflows. In 2010, emerging market ETFs
accounted for 55% of total ETF-linked inflows.
Hardly any selling ytd excluding ETF-linked flows
Excluding the impact of ETF-linked flows, FIIs have only sold US$861m worth of Indian
equities ytd compared to net buying of US$25.6bn in 2010. This lack of net selling by FIIs
(excluding ETFs) is a factor preventing us from becoming more positive on Indian equity
markets despite the downtick in food inflation readings (see our note Primary food prices back to
Nov levels, dated 17 February 2011).
What is our methodology? Track the change in ETF share count
Trading of EEM US (iShares MSCI Emerging Markets Index fund) averages US$3bn daily.
However, selling or buying on the underlying emerging market exchanges happens only when
there is a change in the ETF share count – ie, units are created or extinguished. We track the
changes in share counts for key emerging market-, Asian- and India-specific ETFs to derive ETFlinked
flows.
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