汇丰银行资产配置GEMsfundsflowsInvestorspreferenceforEMfund

Disclaimer&DisclosuresDisclaimer&DisclosuresThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.MiFIDII–ResearchIsyouraccessagreed?CONTACTustodayButwatchoutforinvestors’moodswingsInvestorsarecurrentlyreactingtoperceivedmorehawkishtonesbytheFed,ECBandBOE.Thishashurtglobalriskappetitesomewhatandincreasedcross-assetvolatilityfromverylowlevels.Aswehavementionedbefore,thecurrentdata-dependentenvironmentmightkeepmarketsuneasyasinvestorstrytopredictDMcentralbankactions,sovolatilitymightpersist.WestillexpectagradualstimuluswithdrawalbyDMcentralbanks.However,accompaniedbyarelativelystableChinagrowthoutlook,range-boundtostrongcommoditypricesandsoundEMfundamentals,thisshouldnotbecounterproductiveforourbenignEMstory,“buyondips”.OntheFed,HSBCexpectsagradualoveralltighteningcycletotheendof2018,withamixoflimitedratehikesandreductionofthebalancesheet,supportingasoftUSDandlowUSTyieldoutlook.OntheECB,weexpectdatatoconfirmthattighterconditionsarenecessary.HSBCEconomicspredictsnoratehikesthrough2018butagradualtaperstartingyear-end2017.Also,recentfinancialsystemwoes,particularlyinItaly,suggestcaution.OntheBOE,HSBCdoesnotforeseerateriseseitherthisornextyeargivenweakwages,aslowingeconomyandBrexitrisks.Globally,range-boundoilprices,lowproductivityandsoftwagepressuresshouldhelptokeepinflationlowinDM,socentralbanksshouldhavelessneedtobeaggressive.Investors’preferenceforEMoverDMcontinued,asapercentageofAUM,intheweekended28June.WithinEMbondfunds,China,BrazilandMexicocapturedthelargestinflowsinUSD,whileChina,IndiaandfrontiermarketsledasapercentageofAUM.AmongEMequityfunds,China,IndiaandSouthKoreagainedthemostinUSD,whilefrontiermarketsandMexicosawlargestinflowsinAUM.StrongETFandnon-ETFaswellasinstitutionalfundsliftedEMbonds,mainlyEXD,whilesolidETFandinstitutionalfundssupportedequityfunds(p.13).InDM,US,EuropeanandGlobalfundsboostedbondfunds,whilelargeinflowsintoEuropeanandGlobalfundsmorethancompensatedongoingwithdrawalsfromUSequityfunds..Lastweek’sequityflowsSource:EPFRGlobal,HSBCLastweek’sbondflowsSource:EPFRGlobal,HSBCBertrandDelgadoDirector,SeniorEMStrategistHSBCSecurities(USA)[e-mail][phone]KishoreMuktinutalapati*EquityStrategistHSBCSecurities&[e-mail][phone]JohnLomax*[e-mail][phone]Issuerofreport:HSBCSecurities(USA)Inc.Published:30June2017*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsViewHSBCGlobalResearchat:’preferenceforEMfundsoverDMpersistsMULTI-ASSET●GLOBALEMERGINGMARKETS30June20172Dailyfinancialaccountportfolioflowsshowstronginflowstobonds(sevencountries),mainlySouthKorea,ThailandandIndia,andintoequities(eightcountries),mostlyIndia,SouthKoreaandSouthAfrica(p.15).HSBC’searlysignallingsystempointstoconstructivedemandforEXDandequitiesbutweaknessinLCD(p.14).Similarly,EMfundflowsmomentum(p.5)anddispersionindicators(p.8)highlightsomeeasinginriskappetitebutmainlyforLCD.Nextweek,themarketwillfocusonJune’sUS,ChinaandEMUmanufacturingandnon-manufacturingindicatorsaswellasUSnon-farmpayrolls.AlloftheseshouldprovidemoreclarityaboutthecourseofglobalgrowthandtradeinQ22017andgrowthdynamicsintheUSeconomy,whichshouldhelpinvestorsinanticipatingFedpolicyrateandbalancesheetactionsahead.Also,investorswillfollowcloselytheFOMCminutesformoredetailsontheexpectedreductionofthebalancesheet.BondfundflowsInflowstoEMbondfundshavecontinuedfor22weeksinarow,ledbyEXDandGEMsfunds(charts25and26).SofarthisyearnetinflowsintobondfundsamounttoUSD44.3bn,supportedbyEXD(USD27.9bn)fromthecurrencytypeandGEMfundsfromtheregionalside(USD40.8bn).Non-ETFfundshaveaddedUSD27.7bnandETFUSD14.1bny-t-d.InflowstoEMcorporatebondfundscontinuedforthe13thconsecutiveweek,ledbycrossoverandEXDfunds(charts27-28).InvestmentsinEMcorporatebondfundsareUSD3bny-t-d.InMay,allocationsinEXDincreasedmainlyinTurkey,ChinaandEgypt,comparedtoApril,attheexpenseofArgentina,VenezuelaandUkraine.OnLCD,Poland,BrazilandRomaniagainedthemost,whilepositioninginRussia,MexicoandIndonesiadropped(p.18).AccordingtotheMinistryofFinance,Japan,Institutionalinvestorsremainednetbuyersofforeignbonds,purchasingUSD2.9bnofforeignbondsintheweekended24June2017.Duringtheweekended28June,Uridashibond(retailbondinJapan)issuanceswastriggeredbyissuancesinINR(USD10.9m)andTRY(USD9.3m).Year-to-date,MXNwasthefavouritecurrencyintheEMspacewithtotalissuanceofUSD717m,followedbyTRYandINR.EquityfundflowsInflowsintoEMequityfundscontinuedintheweekended28June.Bothactiveandpassivefundsattractedfreshmoney(chart65).Retailandinstitutionalfundsalsosawinflows(chart66).GEMfunds(withbroadestmandatetoinvestacrosst