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Global investors turn bearish on India, China funds

Investors from across the world appear to have started dumping India and China funds in favour of those focused on other Asian markets.

business Updated: Nov 19, 2007 16:04 IST

Investors from across the world appear to have started dumping India and China funds in favour of those focused on other Asian markets like Korea and Malaysia, the latest available data show.

Global funds focused on India have sold shares worth $980 million so far this year, the second highest outflow after $2,668 million from China funds in Asia-Pacific region, according to data compiled by international fund tracking firm EPFR Global.

This comes in sharp contrast with China and India funds seeing the biggest inflows of $4,494 million and $1,754 million respectively in the same period last year.

The funds focused on South Korea had recorded a net outflow from $14.5 million in 2006 till the second week of November -- the biggest outflow for Asia-Pacific region. However, these funds have seen a massive inflow of about $2,800 million this year, which is the highest in the region.

In the second week of November, China and India, the two most expensive markets in Asia, faced the biggest redemptions over past 12 weeks, global financial major Citigroup's brokerage division said in a report on Monday.

"Resurgence of credit crunch worries triggered broad redemptions from Asian funds," but fund flows to markets like Korea, Malaysia and Thailand went against the tide and recorded inflows during the week, Citigroup said.

EPFR Global said in its weekly report that investors pulled out over $five billion from emerging market equity funds last week, including over two billion dollar from funds focused on four BRIC markets -- Brazil, Russia, India and China.