New Delhi: Foreign institutional investors have pulled out funds worth USD 7 billion from Asian equities in January with India witnessing outflows of USD 1.64 billion, says an HSBC report.
"Foreign investor sentiment has dipped sharply, with FIIs withdrawing over USD 7 billion of funds so far from Asian equities in 2016 (up to January 24)," the report said adding "this is the highest fund outflow recorded in January since the 2008 global financial crisis".
FIIs have been net sellers across the Asian markets, with Korea and Taiwan witnessing the largest outflow at USD 2.4 billion each, as per the report titled "The Flying Dutchman". India witnessed a net outflow of USD 1.64 billion, while the Philippines, the smallest market in the region, saw the
least outflow of USD 97 million.
"The start to the New Year has been rather challenging for the Asian equities. Lacklustre macro numbers and RMB volatility accompanied by a further dip in oil prices have increased uncertainty in the equity markets," the report noted.
Meanwhile, mutual funds have also seen withdrawals. The EPFR Global tracked funds withdrew USD 1.2 billion from Asia ex-Japan equities in the last 4 weeks (ending January 20, 2016).
Taiwan and India are the only two markets where mutual funds have an overweight position, while they cut down their holdings in Chinese equities to a five-year low. Global funds, meanwhile, increased their exposure in China, which is now the only market in the region where they are overweight. Global funds are neutral on India and Taiwan.
The global brokerage firm is 'overweight' on Singapore, the Philippines, and China; and 'underweight' on India, Malaysia, Taiwan and Hong Kong.