Regional govt efforts to drive economies out of recession are fuelling investor appetite for risk
After a six-month drought, foreign investors have been sending billions of dollars back to Asia, a trend some expect to continue on hopes that China will lead the region out of the global economic recession.
Foreigners have poured a net US$6 billion into six major Asian markets since early March, according to BNP Paribas, helping to boost China, Taiwan and South Korean stocks by up to 35 per cent this year and making them the world’s best performers.
Regional government efforts to drive their economies out of recession by aggressively cutting interest rates and spending billions of dollars on stimulus packages, especially the US$600 billion implemented by China, are fuelling international investor appetite for risk after months of caution.
‘I think it’s time to be in risky assets. The rally we’ve seen since March is the start of a new bull market,’ said Anthony Bolton, president for investments of Fidelity International, an affiliate of the world’s top mutual fund firm Fidelity Investments, on a trip this week to Taiwan.
‘I started to put in money in September, November, and then January and March. We are buying China-focused funds,’ said Mr. Bolton, whose contrarian bets made him a top UK fund manager for more than two decades.
China’s official Purchasing Managers’ Index (PMI) for March rose to 52.4, from 49.0 in February, marking its first time in expansionary territory since September, a rebound that prompted Beijing into saying that the economy may have bottomed.
The index is a key survey of the manufacturing sector, showing that managers felt cautiously optimistic about the next few months.
The massive inflows to China plays and other emerging markets contrast with outflows from developed markets, a sign that foreign investors are betting on China leading Asia out of the global recession.
Emerging market equity funds have received inflows of US$7.3 billion so far this year, compared with outflows of US$56.1 billion for developed market equity funds, fund flow tracker EPFR Global said in a recent report.
Meanwhile, mutual fund buying was at a 50-week high of US$946 million, Nomura International said in a report.
China equity funds absorbed another US$243 million and Taiwan equity funds posted their highest weekly inflows in nearly a year, said EPFR.
Fund managers said that they favoured shares of infrastructure, raw materials, personal computer makers and China plays on expectations that they will continue to benefit from China’s massive economic stimulus.
They said that recent interest in Asia by foreign funds is likely to stabilise those markets, as many fund managers buy in on dips after missing initial rallies.
Still, some fund managers advised caution.
‘Globally, policymakers have added US$2 trillion in stimulus but global equity markets have lost US$15 trillion in market cap since the peak of the last bull market,’ said Mark Matthews, Asia-Pacific strategist with Fox Pitt Kelton in Hong Kong. ‘People are misconstruing some of the sequential improvements in numbers for an economic recovery. It’s not an economic recovery and I don’t think we are anywhere near an economic recovery.’ -- Reuters
1 comment:
Foreign funds flow to Asia on recovery hopes
Regional govt efforts to drive economies out of recession are fuelling investor appetite for risk
After a six-month drought, foreign investors have been sending billions of dollars back to Asia, a trend some expect to continue on hopes that China will lead the region out of the global economic recession.
Foreigners have poured a net US$6 billion into six major Asian markets since early March, according to BNP Paribas, helping to boost China, Taiwan and South Korean stocks by up to 35 per cent this year and making them the world’s best performers.
Regional government efforts to drive their economies out of recession by aggressively cutting interest rates and spending billions of dollars on stimulus packages, especially the US$600 billion implemented by China, are fuelling international investor appetite for risk after months of caution.
‘I think it’s time to be in risky assets. The rally we’ve seen since March is the start of a new bull market,’ said Anthony Bolton, president for investments of Fidelity International, an affiliate of the world’s top mutual fund firm Fidelity Investments, on a trip this week to Taiwan.
‘I started to put in money in September, November, and then January and March. We are buying China-focused funds,’ said Mr. Bolton, whose contrarian bets made him a top UK fund manager for more than two decades.
China’s official Purchasing Managers’ Index (PMI) for March rose to 52.4, from 49.0 in February, marking its first time in expansionary territory since September, a rebound that prompted Beijing into saying that the economy may have bottomed.
The index is a key survey of the manufacturing sector, showing that managers felt cautiously optimistic about the next few months.
The massive inflows to China plays and other emerging markets contrast with outflows from developed markets, a sign that foreign investors are betting on China leading Asia out of the global recession.
Emerging market equity funds have received inflows of US$7.3 billion so far this year, compared with outflows of US$56.1 billion for developed market equity funds, fund flow tracker EPFR Global said in a recent report.
Meanwhile, mutual fund buying was at a 50-week high of US$946 million, Nomura International said in a report.
China equity funds absorbed another US$243 million and Taiwan equity funds posted their highest weekly inflows in nearly a year, said EPFR.
Fund managers said that they favoured shares of infrastructure, raw materials, personal computer makers and China plays on expectations that they will continue to benefit from China’s massive economic stimulus.
They said that recent interest in Asia by foreign funds is likely to stabilise those markets, as many fund managers buy in on dips after missing initial rallies.
Still, some fund managers advised caution.
‘Globally, policymakers have added US$2 trillion in stimulus but global equity markets have lost US$15 trillion in market cap since the peak of the last bull market,’ said Mark Matthews, Asia-Pacific strategist with Fox Pitt Kelton in Hong Kong. ‘People are misconstruing some of the sequential improvements in numbers for an economic recovery. It’s not an economic recovery and I don’t think we are anywhere near an economic recovery.’ -- Reuters
Post a Comment