Foreign Investment Trends in October: Reducing holdings in India and South Korea, overweighting in China
In September this year, overseas growth funds increased their holdings in the Chinese stock market for the first time in 10 months. Asian funds' holdings in the Chinese stock market are currently at a five-year high
Overseas Asian funds are withdrawing funds from the Indian and South Korean markets and actively building positions in the Chinese market.
According to the latest research report from HSBC on October 24th, in September this year, overseas Asian funds actively established positions in the A-share market. Growth-oriented overseas funds increased their holdings in the mainland market for the first time in 10 months. The holdings of Asian funds in the Chinese stock market are currently at a five-year high (measured by Z-score).
At the same time, overseas Asian funds are withdrawing funds from India, South Korea, and Taiwan markets. The scale of fund withdrawal from India is particularly significant.
As of October this year, foreign institutional investors have sold $8 billion worth of Indian stocks, marking the largest monthly outflow of funds since the beginning of 2020. Most of the related divestment funds are flowing into the Chinese market.
Foreign selling in the Indian market has been ongoing for some time. Goldman Sachs previously downgraded its rating on Indian market stocks from overweight to neutral, with analysts warning that due to weak corporate earnings prospects, high market valuations, and weak external support, the Indian stock market will experience volatility in the short term.
The divestment trend in the South Korean market also continues. In October, foreign institutional investors sold $2 billion worth of South Korean stocks, marking the third consecutive month of net selling. In the Taiwan market, foreign investors turned into net buyers of stocks in October after three consecutive months of selling. However, in terms of the overall portfolio, Taiwan still saw the largest divestment.
With the decline in US bond yields in September, Asian funds also turned to some ASEAN markets. Holdings in Thailand are at a five-year high. However, overall, after inflows of approximately $5 billion over the past three months, ASEAN markets saw $1.1 billion in fund outflows in October