India shares 1/3 of US funds into Asia

Foreign fund flows into Asian markets are likely to remain strong in the first part of 2006, ignoring geopolitical risks.

business Updated: Jan 09, 2006 14:06 IST

Foreign funds are expected to keep pouring money into Asian equities in the first quarter of 2006, researchers said on Monday.

In 2005, India accounted for more than a third of the US inflows into Asian markets.

Most fund managers queried by The Business Times remained bullish after a year in which investors pumped money into foreign funds specialising in Asia.

Although emerging markets outperformed developed stock markets last year, they still trade at a sizeable discount, Brad Durham, managing director of Emerging Portfolio Fund Research (EPFR) told the newspaper.

Fund flows are likely to continue to be strong in the first part of 2006, ignoring economic and geopolitical risks, he noted.

South Korea, followed by Pakistan, India and Japan, were the best Asian performers in 2005. Indonesia, the Philippines, Singapore, and Thailand followed.

EPFR tracks almost 10,000 US, European and other international funds.

India accounted for more than a third of $7 billion of inflows into the Asian markets, excluding Japan, according to the Boston-based firm.

Global investors are currently ignoring economic and geopolitical risks that would affect all markets, Durham said, noting slower growth in the US would hurt Asian exports, while higher oil and gas prices could also curb European growth.

Potential geopolitical risks include Russia curbing gas supplies to lever control over former Soviet states such as the Ukraine, a crisis surrounding efforts to counter the attempts of Iran and North Korea to obtain nuclear weapons and persistent terrorist attacks, said EPFR.

First Published: Jan 09, 2006 13:32 IST