Earlier this month, Bank of America-Merrill Lynch found that investors are more bearish on emerging market equities than they have been for 13 years, and new survey by HSBC Global Research reinforces this trend.

Foreign investors’ shift out of EM-listed equities continues, with the sale in August totalling $3.1 billion, leaving year-to-date inflows at $2.3 billion. And Asia ex-Japan mutual fund outflows totalled $2.4 billion in the 30 days to August 21, says HSBC, citing EPFR Global data.

The only country in the region to see positive flows was Korea, with some $800 million invested into its stock markets in the month to August 26. All other markets suffered drawdowns, with Taiwan and Thailand suffering the most significant outflows, of $1.9 billion and $1.1 billion, respectively, HSBC says, citing Bloomberg data.

Outflows from Indian stock markets slowed, with some $300 million being pulled out this month, a reasonably moderate amount compared with $1.7 billion of outflows in June and $1 billion in July, HSBC notes. The exodus from India was likely spurred by the US Federal Reserve’s hints in late May that it will ease off its quantitative easing programme.

The recent data suggests there may be a level of confidence returning to the country, HSBC says. “Despite the uncertainty of growth in India, equity positions have remained sticky, possibly a reflection of investors’ comfort with some of the larger, defensive, high ROE [return-on-equity] companies in the market,” say HSBC analysts.

Outflows from Indonesian stock markets, meanwhile, totalled $400 million in August, in line with July redemptions, but substantially less than in June, when investors yanked $2 billion.

(The mutual fund data collected by HSBC has a three-week time lag, hence the reason why this data is dated July.)

While China fund positions remain stable, weightings to Korea, Taiwan and Indonesia have dropped in July. HSBC analysts note that although stock markets in Korea experienced a rise in inflows, the mutual fund's positions to Korea were low. That implies that the fund weight of Korea has most likely changed in the first weeks of August, says Herald van der Linde, Asia-Pacific head of equity strategy.

Indonesia’s weightings are near a five-year low, says HSBC, “which explains why outflows from Indonesian equities have been relatively small – fund weightings were low to start with anyway”.

In terms of sectors, mutual funds increased cyclical exposure to materials companies, but remain defensively positioned, going overweight healthcare, telecom and utilities. They are underweight consumer staples, industrials, financials and energy stocks as of the end of July.