EM Funds Underweight Asia in July – Nomura By Investing.com

Investing.com– Emerging market funds were underweight Asian markets through July, Nomura said in a note, with underweight positions in India, China and Taiwan reflecting a shift in risk-on sentiment earlier this year.

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

Underweight positions in China and Hong Kong have increased since June as sentiment towards the region has shown little sign of improvement. A series of interest rate cuts and promises of stimulus measures from Beijing did little to boost local markets, while weak economic readings in the country continued to emerge.

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 EM Asia fell across the board as a rally in the Japanese yen undermined a carry trade across the currency.

While regional markets recovered much of their late-August losses, sentiment toward risk-based assets remained on the fringes, especially amid concerns over further appreciation of the yen.