Foreign flows surpass last year's tally

Overseas inflows into the Indian markets have surpassed last year’s tally, with foreign institutional investors (FIIs) pumping $5.8 billion into Indian stocks, compared to $4.5 billion invested in the same period last year, and $3.3 billion in the whole of last year. Other than India, overall foreign flows into regional markets such as South Korea, Taiwan and Indonesia have been strong this year. Year-to-date, FII inflows into Asia (excluding Japan) are $34 billion, nearly five times what they had invested during the same period in 2015. The easy liquidity situation has largely been fuelled by supportive global central banks and hopes that the US Federal Reserve will push forward further interest rate hikes, say experts.

“FIIs continued to focus on accommodative monetary policy, with global rates expected to remain lower for longer. This, together with receding concerns about China’s growth, resulted in continued positive fund flows across emerging Asia,” says Herald van der Linde, head of equity strategy, Asia Pacific, HSBC.

The pace of flows, however, was seen dropping in August. FII inflows in Asia (excluding Japan) have been $6.6 billion this month compared to $13 billion in July. India has got $1.2 billion in August compared to $1.7 billion last month. The Indian markets have consolidated in August, following a four per cent rally last month. Most global markets, too, have moved in a narrow band this month.

According to HSBC, India remains the consensus overweight market for investors investing in emerging markets in Asia. Taiwan, however, is the most preferred and China the least preferred market.