After 10 weeks of outflows, emerging markets finally saw inflows around USD 300 million inflows last week, but it’s India which is witnessing an increased allocation, said Rishav Dev, Equity Strategist at Quant Capital.
In an interview to CNBC-TV18, Dev said around USD 1.3 billion of inflow was seen into just India equity funds and the pace has been increasing every week.
Below is the transcript of Rishav Dev's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Anuj: What has been the equity flow picture especially in to emerging markets and India in particular?
A: Emerging market after 10 weeks of non-stop outflows last week we saw marginal inflows of USD 300 million into emerging market but the way the India story is developing, USD 1.3 billion of inflow was seen into just India equity funds. So within emerging markets with the allocations increasing towards India, the pace of inflows into India is increasing every week.
Ekta: What would you quantify in terms of flows that we have seen in the debt market for India as compared to other debt markets globally, other emerging market debt funds which have higher yields like India?
A: If you look at China, it has been seeing nonstop outflows from the debt market for the past few weeks whereas in India, we have seen substantial amount of inflows into debt funds both on the corporate side and USD 30 million limit has already exhausted but incremental inflows would be seen in terms of coupon reinvestment in the next few weeks. Having said that I think on the debt side, with the announcement that the RBI governor made yesterday afternoon, there might be some degree of slowdown in the corporate debt side but investors should not be too much worried about that aspect. On the equity side, we are seeing a lot of inflows.
Ekta: Are we seeing spike up in the corporate debt shorter-term maturity simply because what came out from the Reserve Bank of India (RBI) is only going to be applicable end of February, so have you seen any sort of incremental movement in shorter-term corporate bonds?
A: We haven’t seen incremental movement as of now but the January month-to-date figure showed that USD 3.7 billion has entered the corporate debt side but the steps that RBI has taken, they want to make sure that non-volatile debt funds remain invested in India whereas any short-term debt funds -- they would like them to exit to some extent because the way the rupee is appreciating, RBI would not be very comfortable with rupee appreciating too much going forward. So these steps were taken with a view that they want to stem the appreciation of rupee in the near-term.
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