Bangkok Post: Today's Top Stories
Foreigners cash out
Singapore - A new report by Citigroup blames rising inflation and fears stagnation have triggered a flight of foreign funds out of regional markets - although Thailand is still a net gainer.
China has taken the biggest hit, the finance house said on Saturday, with the funds offloading $2.78 billion worth of mainland shares between January and mid-June this year.
Foreign fund managers have sold about $4.6 billion in Asian equities, nearly double the $2.48 billion they invested during the corresponding period of 2007, the report said.
But the data was not all grim. Taiwan emerged with $2.1 billion from foreign funds this year, Thailand is still $109.1 million in the black, India $34 million and Indonesia $11 million, the report said.
"For the first time since the 1997-98 Asian crisis, Asia is in a sell-off mode, inspired by developments taking place in its very neighbourhood, namely energy-driven inflation," the Straits Times quoted Merrill Lynch strategist Mark Matthews as saying.
Foreign fund managers sold $254 million in Malaysian equities, compared to $1.1 billion pumped in last year, the report said.
The city-state is another underperformer, with $229.8 million worth of equities sold this year compared with the $1.1 billion fund flow into Singapore equities last year.
"Whether you are selling coiled steel or cut flowers, the cost of transport is a problem," Matthews told the newspaper. "You have to ask whether it still makes sense to ship stuff from China when the price of a sea voyage from Shanghai represents half of the value of the product."
He expressed hopes that high oil prices will encourage Asian manufacturers to embark on more cost-cutting in order to survive and get more market share. (dpa)