The Flying Dutchman:How mutual funds are positioned across Asia

Foreign institutional investors (FIIs) flows1: FIIs continued to sell Asian equitiesfor the third consecutive month, as net equity outflows touched USD9bn sinceJuly 2017. A combination of a hawkish tone from the US Federal Reserve andincreased geo-political tension surrounding North Korea kept investors on their toes,as they looked for ‘safer havens’ outside emerging Asia.

    The net outflows so far in September (up to 25 September 2017) were USD3.6bn.

    Thailand (USD280m) and the Philippines (USD55m) were the only markets withpositive flows in September. Taiwan (USD1.6bn) and India (USD920m) led theoutflows from the region.

    The recent bout of outflows has resulted in a sharp decline in YTD inflows in Asianequities to USD18.4bn, down c50% on y-o-y. However, we believe EM Asia iscontinuing to offer attractive valuations, and better growth prospects compared to thedeveloped world could still give the stock market a modest rally for the rest of the year.