Monthly outflows surge as gloomy investors cash out

PUBLISHED : Thursday, 08 October, 1998, 12:00am
UPDATED : Thursday, 08 October, 1998, 12:00am

Hong Kong equity-investment funds in August saw the heaviest levels of redemptions so far this year, as increasingly pessimistic investors took the Government's market intervention as an opportunity to cash out.

Net outflows from equity funds totalled US$41.8 million in August, the highest monthly outflow recorded this year, the Hong Kong Investment Funds Association (HKIFA) said yesterday.

In the same month, $113.65 million was drained out of all local investment funds in total, the association said.

HKIFA chairman Desmond Chan Kwok-kit said one reason why the Hong Kong funds witnessed such heavy outflows of capital in August was because the 'second-quarter economic data . . . further confirmed the deteriorating local economic environment'.

'[This] may have prompted more investors to redeem.' Of the first eight months, six have seen cash deserting local equity funds, pushing the aggregate year-to-date outflow to $69.14 million.

'Also, during the government intervention in the equity and futures markets in August, it seems that more investors have decided to stay on the sidelines by cashing out from the Hong Kong market,' Mr Chan said.

Net outflows from equity funds have averaged about $6.7 million a month this year, ranging from $1 million to $10 million per month.

Gross sales and redemptions in the sector for the year to August were $156.59 million and $225.73 million, respectively.

Mr Chan said: 'In general, compared with July, most Asian funds witnessed heavier outflows in August.

'In July, net outflows from the six Asian sectors were at $32.27 million, of which outflows for Hong Kong were at $2.77 million,' he said.

However, by August the net outflow from these sectors had almost tripled to $90.23 million.

The association said one sector that had showed some resilience in August was bond funds.

Bond funds saw net inflows of $870,000.

But while the sector managed to attract gross sales of $53.14 million - the highest monthly gross this year - inflows into the more developed bond-market funds were almost entirely offset by emerging bond-market fund outflows.