Funds pull out $741 mn from India in 2007

BANGALORE: India and China-focussed funds saw huge outflows totalling over $3.5 billion in 2007, according to Boston-based fund tracker EPFR. According to data from EPFR, while Brazil saw net inflows of $4.4 billion and Russia $1.18 billion in 2007, India-focussed funds saw net outflows of $741 million and China $2.86 billion. Incidentally, both India and China had net inflows of $1.6 billion and $6.35 billion in 2006, respectively.

During the previous week, emerging markets had modest inflows of $1.02 billion committed to the global emerging markets (GEMs) and EMEA. Funds focused on Brazil saw inflows which were nearly six times of their 2006 total while investors in China funds continued to redeem their holdings although the Chinese funds brought in 75% gain in CY2007.

All emerging markets had a net inflow of $40.82 billion in 2007 as against $22.44 billion in 2006 led by robust inflows into Latin American funds $10.15 billion ($3.31 billion in 2006).

“The message for 2007 is unequivocal. A broad re-rating has prompted a big rotation as investors from developed markets seek to increase their exposure in places like Russia, Brazil and Korea,” a release from EPFR said quoting its MD Brad Durham.

Agreeing with Mr Durham’s view, CMD of Angel Broking Dinesh Thakkar says: “The only near-term risk to markets would stem from US slowdown which could hamper liquidity flows in the short term though in the long run liquidity would continue to chase emerging economies, which are expected to be the next power engines of global growth.”