(Repeats story from late on Wednesday with no adjustments to textual content)
* Asian equities see greatest month-to-month inflows in additional than a decade
* Currencies gallop to milestone highs over softening greenback
* Buyers say there’s additional cash to come back
By Tom Westbrook and Stanley White
SINGAPORE/TOKYO, Dec 9 (Reuters) – Cash surging into Asia has equities in India and South Korea at document highs and the area’s currencies on the cusp of their finest ever quarter, signalling a shift in capital flows that traders say is ready to raise Asian asset costs even increased.
At $17.5 billion, international shopping for of Asian shares was the heaviest in a dozen years final month and the wall of money that streamed into regional bond markets totalled $15.2 billion.
Cash managers anticipate the rising tide has an extended approach to run as traders rush again into the area, attracted by low valuations, excessive yields in some markets and indicators that almost all economies are rebounding.
Internet fairness outflows nonetheless quantity to $34.1 billion up to now in 2020 after pandemic-induced promoting early within the yr, and web bond inflows outdoors China are solely $1 billion, suggesting loads of dry powder will be put to work.
“It will not occur in a transparent clean line and there can be volatility,” mentioned Nader Naeimi, head of dynamic markets at AMP Capital.
“However some quick cash appears to be getting once more,” he added, referring particularly to flows into Thailand, the place foreigners purchased $1.1 billion in equities in November and the inventory market had its finest month in 17 years.
India and South Korea have been different favoured locations, and benchmark indexes there have scaled document peaks, lifting the S&P BSE Sensex by 78% and the Kospi by 91% from March lows.
“We see a chance to rotate away from China,” mentioned Andrew Gillan, head of Asia ex-Japan equities at Janus Henderson Buyers in Singapore, who’s bullish on Seoul-listed chip makers and banks in less-loved markets in Southeast Asia.
“We like China, however from an asset allocation perspective, it’s much less doubtless that China will outperform within the subsequent 12 months just because, within the 20 years I have been investing, that is the strongest 5 years for China relative to the area.”
Prashant Bhayani, Asia chief funding officer at BNP Paribas Wealth Administration, mentioned Singapore and Indonesia are engaging because of publicity to cyclical and worth shares.
Fairness and bond flows have additionally pushed massive shifts in foreign money markets, sending Asian currencies to multi-year highs, illustrating the depth of cash shifting into the area.
MSCI’s Asia ex-Japan foreign money index is up a document 4% this quarter at all-time excessive and it’s on monitor for an annual acquire of 6% – double the rise within the rising markets’ foreign money index.
To make certain, the toughest hit markets stay under pre-pandemic ranges, and others really feel overdue for a pullback, with current features extraordinarily susceptible to outright reversal, as March’s expertise made clear.
“There isn’t any such factor as sticky cash for Indonesia, let’s be clear about that,” mentioned SooChong Lim, head of Asia company analysis, at J.P. Morgan in Hong Kong.
“(However) this fund movement could be very totally different…now the worldwide faucet is flowing and Indonesia stacks up fairly nicely,” he mentioned. “For Indonesia, the perfect barometer on the sentiment is the rupiah.”
The foreign money is up greater than 5% since October and is close to a five-month excessive as traders have dived in to the bond market, driving 10-year sovereign debt yields down by some 70 foundation factors however nonetheless nicely above 6%.
(Reporting by Tom Westbrook in Singapore and Stanley White in Tokyo; Further reporting by Cynthia Kim in Seoul and Patturaja Murugaboopathy in Bengaluru; Modifying by Kim Coghill)