INFLOWS TO INDIA PICKS UP

After two months of continuous outflows, Asia equities witnessed inflows last month to the tune of USD 7 billion in May and flows into India also witnessed an uptrend, an HSBC report says. According to an HSBC research note that analysed how mutual funds are positioned across Asia, "May saw a reversal of fortunes – Asia witnessed inflows after two months of continuous outflows." Asia witnessed fund inflows to the tune of USD 7 billion, after a decline of USD 1.5 billion in March and April. Meanwhile, India continued to attract inflows as well, although the pace has declined considerably from the start of this year, the inflows in the month of May were better than that of March and April.
According to HSBC, India witnessed an absolute net fund flows of USD 2.9 billion in May (till May 22), taking the total fund flow so far this year to USD 14.2 billion. In January and February India witnessed fund inflows of USD 4.1 billion, which decline significantly in March and April to USD 1.9 billion and USD 1.2 billion respectively. In the year 2012 India witnessed a total fund flow of USD 24.6 billion, HSBC report said.
Across Asia, investors took money out of Korea only in May, while there were inflows in other markets like -- Taiwan, Thailand, Indonesia, Philippines and India. "Taiwan witnessed inflows which were significantly larger than flows seen in previous months. In the ASEAN markets, The Philippines have continued to witness inflows, and we have seen acceleration in buying in Indonesia as well," HSBC said. Meanwhile, on a relative basis, funds' exposure to developed markets like Singapore and Hong Kong has continued to decline. Hong Kong is now at its largest underweight seen in the last five years. Exposure to Korea also fell.
Sector-wise, mutual funds have switched from industrials to materials, stayed neutral IT, reduced exposure to utilities, and remained underweight consumer discretionary, consumer staples and energy, HSBC said.