Market round-up: Inflows into EM funds offset India redemptions

In case of China, fresh warnings about risks of relying on credit to fuel growth have trumped some solid macroeconomic numbers while India saw economic growth lose momentum in the third quarter


Asia ex-Japan equity funds recorded the biggest outflows among the regional groups as more than $100 million was redeemed from both China and India equity funds in the week till 21 September, data collated by Emerging Portfolio Fund Research (EPFR) shows.  Photo: AP
Asia ex-Japan equity funds recorded the biggest outflows among the regional groups as more than $100 million was redeemed from both China and India equity funds in the week till 21 September, data collated by Emerging Portfolio Fund Research (EPFR) shows. Photo: AP

Both China and India markets continue to enjoy strong support from diversified emerging market (EM) funds serving institutional clients (see chart).

Their purchases of Chinese and Indian equity have offset large institutional redemptions from specific China and India equity funds.

In fact, Asia ex-Japan equity funds recorded the biggest outflows among the regional groups as more than $100 million was redeemed from both China and India equity funds in the week till 21 September, data collated by Emerging Portfolio Fund Research (EPFR) shows.

In the case of China, fresh warnings about the risks of relying on credit to fuel growth have trumped some solid macroeconomic numbers while India, despite progress on internal tax harmonization and decent monsoon rains, saw economic growth lose momentum during the third quarter.

CARE debt quality index shows stabilization signs

The CARE Ratings Debt Quality Index is showing signs of stabilization with an upward bias. After declining in March and April this year, the index stabilized in subsequent months and registered noticeable improvement in August. It rose 24 basis points to 91.16, a level last seen in January-February this year.

Evidently, while the trajectory of the index in recent months points to improving debt quality, the pace of change is rather slow.

The index captures debt quality of 1,581 companies in CARE Ratings portfolio. The combined debt of these companies stood at Rs30 trillion in August. The upward movement indicates improvement in debt quality of the sample companies. The base year of the index is 2011-12 and captures changes on a scale of 100.

India’s LNG imports reach a high in August

Liquefied natural gas (LNG) imports to India in August were their highest so far in fiscal year 2017. That’s after June and July were relatively slower owing to seasonal factors, and the fact that the Dabhol terminal was shut because of the monsoon season.

Still, from April to August 2016, LNG imports increased by a robust 25.8% year-on-year, according to Petroleum Planning and Analysis Cell. The momentum in LNG imports may well continue. As expanded Dahej (Petronet LNG) terminal capacity ramps up, and as GAIL (India) Ltd-operated Dabhol terminal resumes operations post-monsoon, Nomura Financial Advisory and Securities (India) Pvt. Ltd expects LNG imports to be even stronger in the second half of this fiscal year.

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