August 28, 2013

Foreign fund outflow from SEA markets

From Bloomberg: The MSCI Southeast Asia Index has dropped 11 percent this month and is down 21 percent from this year’s peak on May 8. The MSCI Southeast Asia gauge has posted average losses of 44 percent in bear markets since 1995.

“People are finding excuses to sell,” said Patrick Chang, the Kuala Lumpur-based head of Asean equities at BNP Paribas SA. “There’s a bit of a shift of money from emerging markets.”

International investors have been net sellers of regional shares this month, according to exchange data compiled by Bloomberg. Outflows in Thailand were $1.3 billion through yesterday, while Indonesia had $570  million of withdrawals this month and the Philippines had $347 million.

While the retreat has spurred state pension funds in Indonesia and Thailand to boost stock holdings, Bank Julius Baer & Co. and Societe Generale say it’s too early to buy.

In the Philippines, protests over the misuse of discretionary government budgets have spurred concern about a slowdown in state spending, which accounted for 8.1 percent of the economy in the fourth quarter of 2012.

Thailand, the Philippines and Indonesia led the four-year rally in global shares through May as Fed stimulus spurred international investors to seek higher-yielding assets. - WealthSec