Macquarie Research, :Fund Flow - Fear and opportunism both at play

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Weekly Fund Flow Tracker
Fear and opportunism both at play
Local exchange data: Northeast Asia can’t catch a break
􀂃 Another round of foreign net-selling in Taiwan and Korea. Amid the series
of tragic events in Japan since 11 March, the aggregate of the of six Asian ex-
Japan markets where high-frequency data is available (ie, Korea, Taiwan, India,
Thailand, Indonesia and the Philippines) recorded a return to foreign net-selling
of -US$2.8bn for the week ending Wednesday, 16 March. This was driven
mainly by the -US$1.66bn net-selling in Korea and -US$1.26bn net-selling in
Taiwan, vs last week’s net-buying of US$80m and US$362m, respectively. We
note, however, that -US$1.08bn (65%) of this sum for Korea happened before
the 11 March quake, whereas over 80% of the weekly outflow for Taiwan was
recorded after 11 March – possibly due to concerns over electronics supplychain
disruptions.
􀂃 Net inflows for TIPs and India. Outside Northeast Asia, India recorded netbuying
of US$77m as weak linkages to the Japanese economy helped it
escape the foreign selloff. The Philippines and Thailand recorded positive
foreign net-buying of US$83m and US$2.4m, respectively, although Indonesia
was net-sold by -US$41m.
􀂃 Japan net-buying sustained pre-quake. Unfortunately, post-March 11 data
for Japan is not yet available, due to the ordinary one-week delay. For the week
ending 11 March (ie, data preceding the Miyagi quake), Japan recorded
positive US$822m foreign net-buying, down from US$1.77bn the week before,
but still above the 52-week average of US$796m.
􀂃 Frontier markets reflect general rise in risk aversion. Amid heightened risk
aversion, Pakistan and Sri-Lanka recorded net-selling of -US$14m and -
US$1m, respectively, vs net-buying of US$4.3m and US$29.5m the week
before. Foreign net-buying in Vietnam stayed positive but moderated to
US$0.6m from US$1.1m the week before.
Fund subscription data: Right into the danger zone
􀂃 Positive subscriptions to Japan funds. Country-fund subscriptions do offer a
post-quake window on Japanese flows, and we note that Japan-dedicated
funds received positive weekly net-subscriptions of US$86m in the week to
Wednesday, 16 March – a pickup from the previous week’s US$15.7m. By
contrast, weekly net-redemptions from broader Asia-Pacific funds (which
combine Australia and New Zealand with Japan and emerging Asia) intensified
to -US$184m from -US$8m the week before (and the 52-week average of netpositive
US$16.5m).
􀂃 Emerging Asia: weekly net-redemptions across Asia ex-Japan funds. Netredemption
of Pan-Asia ex-Japan regional funds worsened to -US$559m from -
US$198m the week before. Single-country funds saw weekly net-redemptions
for all but three of the 12 regional markets – the exceptions being Taiwan,
Vietnam and Philippines. Taiwan in particular received net subscriptions of
US$11.2m, which – together with the actual stock net-selling according to local
exchange data – suggests rising cash balances at the fund level. China-funds
returned to net redemption (of US$19.9m) after their first positive week since
mid-January (at US$243.2m) last week.
􀂃 GEM net-redemptions worsened. Global Emerging Market funds received
weekly net-redemptions of -US$769m, vs -US$96m the week before (and YTD
average of -US$1.08bn). With this, total redemptions since 19 January (ie, of
US$15bn) amount to fully 25% of the cumulative net-subscriptions since
January 2010.