EM Weekly Fund Flows Monitor_ Foreign selling led by India wow; Strong SB buying led by Tencent; India domestic flows remained robust in Dec; HF exposure stays at 5yr low in China

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the fund flows in Emerging Markets (EM), particularly in Asia excluding China, and highlights significant trends in foreign institutional investor (FII) activities, domestic retail flows, and mutual fund positioning in various markets, including India and South Korea [1][5][41]. Core Insights and Arguments - FII Flows: EM Asia ex-China experienced FII selling of US$0.5 billion week-over-week (wow), primarily driven by India, which saw outflows of US$0.9 billion. Conversely, South Korea recorded inflows of US$0.7 billion [5][41]. - Southbound Flows: Southbound flows into Hong Kong saw strong inflows of US$6.3 billion, marking the highest weekly buying since February 2021, largely attributed to approximately US$4 billion in buying from Tencent [5][23]. - Domestic Equity Mutual Funds in India: Domestic equity mutual fund inflows rebounded to US$4.8 billion in December from US$4.3 billion in November, representing a 13% month-over-month increase. This marks the eighth consecutive month with inflows exceeding US$4 billion [31][37]. - China Fund Positioning: Allocations to Chinese equities in global mutual funds remained low, with net allocation at 6.8%, which is in the 8th percentile over the past five years. Active mutual funds are underweight in Chinese equities by 300 basis points [6][18][20]. - Northbound Holdings: Data from HKEx indicated a US$21 billion outflow in Northbound holdings during the fourth quarter of 2024, primarily in the Utilities, Materials, and Consumer Staples sectors [7][41]. Additional Important Insights - Sector Performance: The report highlights that financial services saw significant increases in holdings as a percentage of the listed market cap, while utilities and materials faced the largest outflows [9][10]. - Top Buying and Selling Stocks: Notable stocks with significant net buying included CATL and WuXi AppTec, while Wanhua Chemical and Kweichow Moutai were among the top sellers [11][12]. - Systematic Investment Plans (SIPs): Inflows via SIPs in India remained robust at US$3 billion, indicating strong retail investor confidence [31][36]. - Global Equity Mutual Fund Flows: Globally, equity mutual funds saw inflows of US$26 billion, contrasting with outflows of US$25 billion the previous week, with US funds contributing US$11 billion to the inflows [5][41]. This summary encapsulates the key points from the conference call, providing insights into the current state of fund flows in emerging markets, particularly focusing on the dynamics in India and China.