FIIs pulling out of India is not a surprise. But where is their money going?
Subscribe to enjoy similar stories. Foreign investors are pulling their money out of India. While that may not be surprising, the question is which global markets are catching the attention of foreign portfolio investors (FPIs) now? The short answer: Apart from China, it was South Korea, Japan and Indonesia.
These three markets alone attracted foreign investments of over $18.5 billion so far in 2024, according to data from Dezerv as of 21 October. FPIs offloaded Indian equities worth a net $8.48 billion from October 1 to 17, data from the National Securities Depository Ltd showed. In early October, the global market chatter was all about China.
The moment China unveiled stimulus measures and economic prospects brightened, foreign investors rushed into Chinese equities, swiftly redirecting capital away from India and Japan, noted Rupen Rajguru, head of equity investment and strategy at Julius Baer India. Weekly inflows into emerging markets were about $40 billion in the second week of October, he said. Of this, a staggering $39 billion poured into China, largely from emerging market funds and directly into Chinese assets.
During this period, there was an outflow of about $3.5 billion from Indian equities, while Japanese stocks registered a record outflow of $9 billion, he said. However, weakness in the yen has encouraged foreign investors to boost their purchases of Japanese stocks, said Vaibhav Porwal, co-founder of Dezerv. The yen posted its biggest decline against the dollar following Prime Minister Shigeru Ishiba's remarks in early October, which calmed concerns about future rate hikes.
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