Flows & Positioning Guide

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Emerging Markets (EM) equity strategy, particularly in Asia Pacific, with specific attention to countries like China, India, Malaysia, and Brazil [1][2][3]. Core Insights and Arguments - Investment Flows: In October, GEM long-only managers reduced underweights in China and Malaysia while increasing their overweight in Brazil. This was funded by reducing underweights in India and Taiwan and cutting Korea overweight [1]. - Outflows: For the week ending November 27, 2024, EM equity funds experienced outflows of US$0.8 billion, primarily from China (US$0.8 billion) and India (US$0.4 billion). Taiwan, however, saw inflows of US$0.4 billion [2]. - Market Allocation Changes: China's index benchmark weight and portfolio weight both decreased slightly month-over-month, reducing the underweight to 68 basis points (bp) from 75 bp in September. Conversely, India's underweight widened to 76 bp from 62 bp [3]. - Sector Adjustments: Investors trimmed positions in Banks and Tech Hardware while increasing allocations to Consumer Services and Semiconductors. Notably, there were significant additions to Alibaba, Meituan, and TSMC, while Samsung Electronics and Kweichow Moutai were trimmed [4]. - Japan's Position: Japan's underweight in global long-only portfolios increased to 46 bp as of the end of October, with net selling by foreign investors noted in the previous week [5]. Additional Important Insights - Active Fund Positions: The report highlights active fund positions in various sectors, with notable allocations in Consumer Staples (6.7%), Information Technology (24.8%), and Financials (22.8%) [18][19]. - Sector Weight Changes: The report indicates a significant shift in sector weights, with Semiconductors and Semiconductor Equipment seeing an active weight of 16.0%, reflecting a positive change in investor sentiment [20]. - GICS Sector Analysis: The report provides a detailed breakdown of active fund positions by GICS sector, indicating a strategic shift in investment focus among fund managers [19][20]. Conclusion - The overall sentiment in the EM equity market reflects cautious optimism, with strategic reallocations among key markets and sectors. The data suggests a trend of reducing exposure to underperforming markets like India while increasing positions in more favorable markets such as Brazil and sectors like Semiconductors and Consumer Services.