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ôLiquidity dried up in India, with foreign institutional investors selling equities to the tune of $2 billion in August,ö in line with concerns over the US subprime mortgage crisis, says Mumbai-based Dhruva Raj Chatterji, a research analyst at Lipper.
The stock market selloff would have been worse, if not for the strong inflows from domestic investors, which Chatterji estimates at Rs41 billion ($1.01 billion) in August. He notes that confidence in the domestic economy helped keep investorsÆ sentiment positive.
India's economy expanded at a faster-than-expected pace in the fiscal first quarter of 2007 due to strong output from manufacturing and services. Gross domestic product (GDP) grew 9.3% on-year in the April-June period, beating even the most optimistic forecasts of analysts. GDP growth had moderated compared with the 9.6% on-year growth in the first quarter in 2006, however. IndiaÆs fiscal year ends in March.
The performance of India equity funds ranged from a return of 8.13% to a loss of 4.74% in August. Funds that invest in capital goods were among the best performers while funds that invest in pharmaceutical companies and information technology-related firms were the worst.
Average August performance of fund groups registered for sale in India, by asset types:
Bond US Dollars +1.94%
Money Market Indian Rupees +0.54%
Bond Indian Rupees, General +0.41%
Equity Global +0.34%
Bond Indian Rupees, Government +0.26%
Mixed-Asset Flexible -1.72%
Equity India -1.35%
Mixed-Asset Balanced -0.67%
Mixed-Asset Aggressive -0.24%
Mixed-Asset Conservative -0.24%
Top 5 equity fund sectors in terms of performance in August, with their average gain/loss:
Equity Sector Utilities +2.47%
Equity Sector General Industry +0.57%
Equity Sector Non-Cyclical -0.20%
Equity Sector Technology Media and Telecommunications -0.51%
Equity Sector telecommunications Services -1.18%
Bottom 5 equity fund sectors in terms of performance in August, with their average loss:
Equity Sector Pharmaceuticals and Health -5.48%
Equity Sector Information Technology -4.58%
Equity Sector Cyclical Consumer Goods -2.74%
Equity Sector banks and Financials -2.68%
Equity Sector Natural Resources -1.32%
Top 5 equity funds in August, with gain:
JM Emerging Leaders Fund +8.13%
JM Small and MidCap Fund +4.69%
Escorts Growth Plan +4.62%
Escorts Tax Plan +3.69%
JM Hi Fi Fund +3.22%
Bottom 5 funds in August, with loss:
Franklin Infotech Fund -6.88%
SBI Magnum Sector Funds Umbrella-Pharma Dividend -6.10%
UTI Growth Sector Fund-Software Income -6.00%
JM Healthcare Sector Fund-Growth -5.90%
SBI Magnum Sector Funds Umbrella-Informatikon Technology -5.53%
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.