Weekly Fund Flow Tracker -No flight from EMs, despite volatility :: Macquarie Research

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No flight from EMs, despite volatility
Local exchange data: mixed bag but positive overall
 Sustained foreign buying driven by NE-Asia and Indonesia... For the
week ending Wed, May 4, aggregate foreign net-buying for the six Asia ex-
Japan markets where data is available (i.e. Korea, Taiwan, India, Thailand,
Indonesia and the Philippines) moderated WoW to US$548m from US$3.5b,
but with only a single day of net-selling on May 4 amid this week’s volatility.

 Among the markets net-bought by foreign investors, Taiwan led with netbuying
of US$559m – a moderation from the previous week’s six-month high
of US$1.6bn but still well above the US$163m 52-week average. Foreign netbuying
in Korea decelerated to US$272m, but also remains above its 52-week
average (of US$219m). Indonesia recorded a strong increase in foreign netbuying
to US$251m vs. US$96m the week before; and the Philippines was
also more strongly net-bought, at US$21.5m vs. US$9m the week before.
 … but Thailand and India took a breather. Thailand recorded foreign netselling
of -US$13m, ending its 11-week streak of consecutive net buying. And
foreign net-selling in India intensified WoW to -US$541m from -US$285m -- a
reversal of the net-buying since late March that totalled fully US$3bn.
 Buying sustains amid commodity correction. Although daily data showed
overall net selling of Asian stocks on Wednesday, as noted, each of the
markets where Thursday data is thus far available recorded positive foreign
net-buying, despite this week’s market volatility.
 Frontier markets a vote for risk. Net-buying in both Pakistan and Sri-Lanka
reversed back to positive from net-selling the week before (US$8.7m and
US$19m, respectively, vs. net-selling of -US$8m and -US$3m), while netbuying
in Vietnam moderated to US$3.4m from US$5m last week. This brings
the total net-buying for the three frontier markets to US$31m, a 4-week high.
Fund subscriptions data: what risk aversion?
 GEM-funds subscriptions accelerate. Weekly subscriptions to Global
Emerging Markets funds increased strongly to US$1.3bn from US$741m the
week before, hinting at sustained preference for the emerging market equity
asset class.
 Emerging Asia: Regional fund subscriptions up a notch. Weekly
subscriptions to Asia ex-Japan regional funds notched higher to US$245m
from US$238m the wee before, vs. YTD average net-redemptions of -
US$276m. Korea-, Hong Kong- and Indonesia-focused funds all received
stronger WoW net-subscriptions, whereas China-, Greater-China- and Indiadedicated
funds all fell into net-redemption territory.
 Developed Asia: Japan fund subscriptions normalizing post-quake.
Weekly net-subscriptions to Japan-focused funds firmed to US$107m from
US$9m – although still below YTD average of US$164m – following four
consecutive weeks of net-redemptions in the aftermath of the Fukushima
nuclear accident. Meanwhile, Asia-Pacific Funds (which combine Australia
and New Zealand with Japan and emerging Asia) received net-redemptions of
-US$29m, undoing net-positive subscriptions of US$29m the week before.