FII money: India gaining on Asia

Except China and Korea, the rest of the pack is no match for India.

Barring China, South Korea is the only competition India has in Asia's emerging markets in terms of attracting foreign institutional investors' (FII's) money.

Thailand, the Philippines and Indonesia are no match for India and even Hong Kong, Singapore and Malaysia are far behind. Taiwan, which traditionally attracts huge FII inflows, is trailing India in the FII investment sweepstakes.

According to figures sourced from international brokerages, over the last six years, between 1999 and 2004, India's share of the net FII inflow into the Asian emerging markets, excluding China, has increased from 12.2 per cent to 30.3 per cent.

Of the six countries, India, Taiwan, Thailand, the Philippines, Indonesia and South Korea, India stood second in 2004 after South Korea, which accounted for 32.8 per cent of the pie.

Data for 2004 on FII investments in Hong Kong, Singapore and Malaysia were not available. However, in 2003, FIIs pulled out money from Hong Kong and Singapore while their inflows into Malaysia were marginal.

Over the six-year period, India was a close second to South Korea in growth in FII inflows while the fund flows to Taiwan and Indonesia fell substantially. Thailand and the Philippines reported a marginal increase in growth in inflows.

In 1999, Taiwan accounted for over 65 per cent of the total inflow into these six countries, raking in $8.27 billion of the $12.61 billion that entered the region. It came down to 28.3 per cent in 2004 ($8.05 billion of $28.42 billion).

Similarly, Indonesia's share has come down during this period from 12.6 per cent ($1.59 billion) to 7.7 per cent ($2.20 billion). Thailand reported a net outflow in the four years between 2000 and 2003 and net inflow of a paltry $9 million last year, accounting for 0.3 per cent of the pie.

Similarly, the Philippines, with a net inflow of $14 million, accounted for 0.5 per cent of the FII pie in 2004.

Japan continued to top the net inflow chart. In 1999, it attracted $78 billion. The very next year it reported an outflow of $20 billion but in 2004 the country received a net inflow of $71 billion, which was double the total inflow into the Asian emerging markets.

Net FII flow data for China, Hong Kong, Malaysia and Singapore were not available for 2004. But between 1999 and 2003, China witnessed an outflow for the first four years and only in 2003 did it see $11 billion in inflows. Hong Kong witnessed inflows in 1999 and 2000 but huge outflows between 2001 and 2003.

After recording net outflows for four years, Malaysia registered a meagre $1 billion inflow in 2003, while Singapore recorded net outflows in all the five years between 1999 and 2003.

When it comes to total foreign funds' equity inflow, that is, both FII and foreign direct investment (FDI), India's share is steadily growing, while the share of Indonesia, Korea and Thailand is slipping, according to data sourced from the Washington-based Institute of International Finance (IIF), an independent body.

The institute's latest capital flow data show that India's share of equity funds flow has gone up from 6.94 per cent in 1999 to 11.45 per cent in 2004.

Total equity flow to India between 1999 and 2004 doubled from $5.12 billion to $11.50 billion. During this period, inflows to China rose from $37.59 billion to $71 billion. In contrast, inflows to Korea halved from $16.94 billion to $8 billion and the Philippines almost by a third, from $6.75 billion to $2.50 billion.