EM funds were underweight on Asia in July- Nomura

Emerging market funds were underweight on Asian markets through July,Nomura said in a note, with reduced positioning in India, China, and Taiwan reflecting a turn in risk sentiment from earlier this year. 

India saw the largest amount of underweight positions in the month, surpassing China and Hong Kong even as the country’s stock markets hit a series of record highs.  

Underweight positions in China and Hong Kong grew from June, as sentiment towards the region showed little signs of improving. A slew of interest rate cuts and promises of stimulus measures from Beijing did little to drive local markets, while weak economic readings from the country continued to trickle in.

EM funds slightly increased their positions in Indonesia, South Korea and Saudi Arabia, the Nomura note said. 

Positioning data for July heralds the severe decline in risk appetite seen in early-August, where Asia EM fell across the board as a spike in the Japanese yen undermined a carry trade through the currency.

While regional markets did recoup a slew of their losses later in August, sentiment towards risk-driven assets remained on edge, especially amid concerns over further appreciation in the yen. 

Source: Investing.com