Emerging markets like India and Indonesia score big on offshore investment inflows


Offshore investment stayed on an upward trajectory in select emerging markets like India and Indonesia, which attracted weekly inflows of $313 million and $234 million respectively, global financial services major HSBC has said in a report.

Offshore investment spurted the most for local bonds in Indonesia and India while Korean government bonds recorded a second consecutive week of outflows, HSBC said.

“According to the latest weekly data, offshore investment rose most for local bonds in Indonesia and India which attracted weekly inflows of $313 million and $234 million, respectively,” HSBC said in a research note.

In contrast, foreign investments into Korea local bonds slightly fell during the week in the run-up to the final results of the legislative elections on April 14.

Meanwhile, Japanese retail investors have increased their holdings of international bonds in March, HSBC said.

According to the latest Toushin fund data, Japanese retail investors’ investment into international bonds rose sharply in March, marking it the largest purchase since May 2012.

Most of the buying was for developed market bonds, with the US attracting the largest investment of $3.3 billion. This was followed by Australian and European bonds in which retail investors’ holdings rose by $2.3 billion and $1.3 billion, respectively, the report said.

In emerging markets, Brazil saw the largest increase in Japanese retail investors’ holdings ($579 million) while local bonds in Mexico, India and Indonesia too stayed on the their favourite list.

The holdings in Mexico, India and Indonesia increased by $199 million, $178 million and $117 million, respectively, in March.

The report, however, noted that in the two weeks ended April 8, Japanese investments in overseas bonds have declined as over $24.7 billion have been sold by Japanese investors.

“This could be partly related to redemptions at the end of fiscal year, but is unlikely to be a sustained trend,” it said.

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