Market Overview

Asia's Former Darling ETFs Hemorrhage Cash

Investors are pulling cash from Asian equity markets and the corresponding U.S.-listed ETFs, but the list of funds seeing recent outflows might surprise some investors. The most obvious candidates for Asia ETF outflows would be China, due to slowing economic growth, and Japan, due to recent strength in the yen.

South Korea would probably be on the list as well because all the yen has recently gained some steam, it is still far weaker than it what six months ago and that is pressuring South Korean exporters. All fine guesses to be sure, but the Asian markets being stung by outflows are among the region's previous high fliers.

Amid chatter that the Federal Reserve is close to ending its bond-buying activities, investors have pulled a combined $1.6 billion from Southeast Asian equity markets since May 22, the most in 22 months, Bloomberg reported.

Former rock star markets such as the Philippines, Indonesia and Thailand. Thailand recorded the most withdrawals among the countries frhttp://www.bloomberg.com/news/2013-06-04/cash-outflows-turn-world-s-best-stocks-to-worst-southeast-asia.htmlom May 22 through June 3, losing a net $769 million, according to Bloomberg.

At the ETF level, the outflows are not staggering...yet. Since May 20, the iShares MSCI Thailand Capped Investable Market Index Fund (NYSE: THD) has tumbled over 13 percent, but the fund has lost less than $4.2 million in assets. The lone Thailand-specific ETF had $985.5 million in assets under management as of June 4, according to iShares data.

The iShares MSCI Philippines Investable Market Index Fund (NYSE: EPHE), which like THD, had been one of the top-performing emerging markets ETFs for over a year. Despite no significant alterations to what is still a compelling fundamental story, Philippine equities have been hammered in recent days.

Since May 20, EPHE has tumbled nearly 15 percent, but the outflow situation while not great is not overly alarming. The ETF has shed almost $13 million in assets, but still has $436.1 million.

On a dollar basis, the worst offender among Southeast Asia ETFs in terms of recent outflows is the iShares MSCI Indonesia Investable Market Index Fund (NYSE: EIDO). That ETF, which tracks the region's largest economy, has lost almost $39 million in assets since May 20, according to Index Universe.

Interestingly, EIDO's main rival, the older Market Vectors Indonesia ETF (NYSE: IDX), has only lost $440,000 in assets over the same time.

In a sign that investors are also eschewing the safety of AAA-rated developed markets, the iShares MSCI Singapore Index Fund (NYSE: EWS) is off 7.6 percent since May 20 and has seen outflows of over $36 million. Recent woes for EWS have taken the ETF's 30-day SEC to nearly 2.7 percent, more than 70 basis points above that of the iShares Core S&P 500 ETF (NYSE: IVV).

For more on ETFs, click here.

Posted-In: Long Ideas News Short Ideas Emerging Market ETFs Events Global Intraday Update Markets Best of Benzinga

 

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