InvestorQ : Have FPIs been investing into all the emerging markets in August, or only in India?
diksha shah made post

Have FPIs been investing into all the emerging markets in August, or only in India?

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Priyanka N answered.
2 months ago
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Actually, it has been like the tale of two flows. While India saw heavy equity inflows from FPIs during the month of August, the rest of Asia saw heavy outflows, almost making it look like a reallocation by investors out of other Asian countries and into India.

For August 2020, India witnessed robust FPI inflows of over Rs.40,000 crore while the other Asian and emerging markets saw heavy bouts of selling from FPIs. In dollar terms, FPIs infused $6.3 billion in Indian equities but sold $6.25 billion across other Asian markets.

Most of the China-dependent Asian markets appeared to take a hit on account of worsening trade relations between the US and China. There was selling by FPIs across most of the key markets including Taiwan, South Korea, Thailand, Indonesia and the Philippines.

Most of these Asian economies rely on China for their economic growth and the worsening relations between the US and China is an overhang. The latest story of how Tik Tok is being harassed in the US is only making global investors absolutely jittery.

Why exactly are investors then betting on India? Most investors are betting on India emerging as an alternative manufacturing base to China. Also, India has corrected steeply and FPIs who moved out of India were looking for a way back.

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