MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
ôThe numbers certainly illustrate the asset destruction taking place in equity markets,ö says EPFR Global senior analyst Cameron Brandt. ôOf the total year-to-date drop in assets under management by the equity funds we track on a weekly basis, only 10% is attributable to outflows. But the build up in money market assets has nearly offset this decline.ö
At the country and sub-regional level, flows into China equity funds hit an eight-week high, Korea equity funds posted a third straight week of inflows and Middle East and Africa funds snapped an 11-week losing run.
For the third straight week EPFR Global-tracked Europe equity funds took in fresh money as governments in the region scrambled to offset the slowing of their economies. Cheap valuations and the fact that the European Central Bank still has room to make significant cuts in its benchmark interest rates were among the factors that prompted investors to commit $664 million to this fund group during the third week of November.
ôFlows into exchange traded funds û ETFs û accounted for most of the inflows into Europe equity funds,ö noted Brandt. ôSo thereÆs a question as to whether this money was seeking the quickest exposure to an anticipated rebound or positioning itself for short selling.ö
Inflows into US equity funds were predominantly ETF-driven as well, with large-cap blend ETFs the biggest recipients of the $3.3 billion taken in by this fund group despite the 6.08% slide in portfolio values. The pendulum remained on the value side, with funds managed for value trumping their growth counterparts in terms of both flows and performance across all capitalisations.
Japan equity funds, meanwhile, posted their seventh straight week of outflows as the strength of the decline in US demand for Japanese exports, exacerbated by the yenÆs recent strength, hit home. JapanÆs fiscal and monetary tools, having been deployed for years to battle inflation, are unlikely to have much impact on a recession that features falling private investment and rock-bottom consumer confidence.
Both of the diversified fund groups geared primarily to developed markets, Pacific and global equity funds, again recorded outflows with the former surrendering $37 million and the latter $829 million.
Emerging markets equity funds remained under pressure during the third week of November thanks to a toxic combination of slowing economic growth in key export markets, ratings downgrades, high risk aversion and falling commodity prices. There was a response to the $590 billion stimulus plan announced by China the previous week, with the $392 million flowing into China equity funds helping Asia ex-Japan equity funds post their first week of inflows since early September. But the diversified global emerging markets, Latin America and EMEA equity funds recorded outflows of $835 million, $177 million and $174 million respectively.
Any optimism about sustained Chinese demand for commodity exports faded rapidly last week. As a result, Latin America equity funds posted outflows for the 22nd time in 23 weeks, with sentiment coming under additional pressure from ArgentinaÆs move to bring private pension fund assets back under state control.
In terms of sectors, year-to-date financial sector funds remain by far the biggest money magnets, absorbing a net $13.6 billion, while technology sector funds have seen the biggest outflows. In terms of performance, however, financial sector funds have the worst record, healthcare and biotechnology sector funds were the best performing.
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Financials and healthcare have been spotted as promising sectors, while several tech IPOs are on the way, including a $2.2 billion fintech firm and a GIC-backed e-commerce startup.
A strong recovery in the Asia Pacific private capital markets in 2021 sets up favourable hiring and compensation trends.
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