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Fund Flow Weekly Summary

Core Content

This report provides an overview of global and regional fund flows for the week of February 11–17, 2016, focusing on equity and bond funds. It highlights the trend of risk aversion and its impact on investment flows, particularly in developed markets (DMs) and emerging markets (EMs). The report also discusses the performance of domestic and overseas-invested funds, and includes insights on the top stocks net bought by different investor types.

Main Points

Global Equity Fund Flows

• Net outflow from equity funds accelerated during the week, driven by a flight to safety due to falling oil prices and global stock market declines.
• Western Europe and North America experienced significant net outflows, with Western Europe suffering the biggest outflow since Sept 2014 at USD4.216 billion.
• Asia ex-Japan equity funds saw a net inflow for the first time in two weeks, with China and Korea experiencing net inflows of USD279 million and USD488 million, respectively.
• EMs continued to see net outflows, but the magnitude contracted compared to the previous week.

Global Bond Fund Flows

• Bond funds generally saw net outflows in most regions.
• North America and Asia ex-Japan experienced net inflows in bond funds, with Asia ex-Japan’s inflow being relatively small at USD0.58 million.
• South America and EMEA had larger outflows in bond funds compared to the previous week.
• Domestic bond funds in Korea attracted a record weekly net inflow of KRW1.14 trillion, the largest since early 2015.

Domestic vs. Overseas Fund Flows

• Domestic equity funds saw increased net inflows, continuing for a second week.
• Overseas-invested funds had a net outflow of KRW54.4 billion due to prolonged global market jitters.
• Domestic bond funds also attracted significant inflows, with a net inflow of KRW1.14 trillion.

Weekly Net Flows and Relative Weightings

• Foreign investors continued to reduce their positions in Asian equity markets, except for Asia ex-Japan and Korea.
• Local institutional investors showed increased buying in domestic equity funds, particularly in large-cap stocks.
• The relative weightings of fund flows are based on free float market capitalization.

Key Information

Foreign Net Flows in Equities

• Korea had a net inflow of USD393 million last week, the highest since the previous week.
• India saw a net outflow of USD464 million, while Taiwan and Thailand also experienced outflows.
• Asia ex-Japan had a net inflow of USD335 million, reversing a trend of outflows.
• Cumulative net flows into Asian equity markets over the past 6 months were negative for most countries, indicating ongoing foreign selling.

Domestic Fund Flows

• Domestic equity funds attracted net inflows of USD455 million, up from the previous week.
• Local institutional investors continued to show strong buying activity, with SK Hynix and Hyundai Motor among the top stocks.
• ETFs and non-ETFs both saw inflows, suggesting diversified investment strategies.

Top Stocks Net Bought

• Foreign investors favored large-cap stocks such as Posco, LG Electronics, and SK Hynix.
• Local institutional investors showed a preference for SK Hynix, Hyundai Motor, and OCI.
• Kospi 200 top stocks included Posco, LG Chem, and LG Electronics.

Conclusion

The report underscores a global trend of risk aversion, with equity funds experiencing accelerated outflows, especially in Western Europe and North America. However, Asia ex-Japan and Korea showed positive inflows, and domestic equity funds attracted increased capital. Bond funds in North America and Korea saw net inflows, while EMs and South America continued to experience outflows. Foreign selling remained dominant in most Asian markets, but local institutional buying was strong, especially in large-cap stocks. The report serves as an informational summary and does not provide individual investment advice.