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Thai investors bet on China equities in Q3

Inflows toward China funds have made UBS AM to be the third largest master fund firm in Thailand, according to a Morningstar report.

Investors in Thailand have poured money into equity funds – mostly in foreign products – during the third quarter, making it the only category having positive inflows during the period, according to Morningstar’s quarterly review of the Thailand fund industry.

Equity products had net inflows of THB 48.4bn ($1.56bn), while mixed-asset and fixed income funds had net redemptions of THB 26bn and THB 3.5bn, respectively. Money market funds also saw net outflows of THB 4.4bn, after seeing huge inflows during the first half of the year.

“Thai investors have shown some sign of interest in foreign investment funds (FIFs) since early this year,” said Chayanee Juengmanon, Bangkok-based research analyst at Morningstar.

“Given that the Thailand stock market does not have much weighting in technology or sectors that benefit from the lockdowns caused by Covid-19, it is not surprising to see the inflows to continue in FIFs.”

In total, net inflows during the quarter was THB 7.8bn. However, the industry recorded net outflows of THB during the first nine months, bringing the industry’s AUM to THB 4.8trn, which is 11.6% lower from 2019, according to the report.

During the first nine months, money market funds continue to lead the inflows at THB 173.5bn. On the flipside, foreign investment bond fix term and flexible bond funds led the outflows.

Thailand’s fund industry YTD net flows (THB bn)

Source: Morningstar. As of the end of September 2020.

China equity funds

Of all sub-categories, China equity funds had the highest net inflows of THB 27.8bn in Q3, doubling the category’s AUM to THB 80bn from around THB 40bn in 2019, according to the report.

Thailand’s fund industry Q3 net flows (THB bn)

Source: Morningstar

New fund launches drove most of the inflows. They include the TMB Eastspring China A Active and the Thanachart Eastspring China A Active funds, both of which are feeder funds that invest in the same product – the UBS (Lux) IS – China A Opportunity Fund.

“As China started to see improving export and manufacturing sector, investors have become more confident in the market,” the report said.

The inflows toward China equity products propelled UBS Asset Management to be the third largest master fund firm by AUM, which saw net inflows of THB 23bn during the first nine months – mostly coming from the TMB Eastspring and Thanachart Eastspring products, according to the report.

Another feeder fund, the Krungsri China A Shares Equity Fund, also invests in the same UBS product.

Amundi, meanwhile, had the second highest net inflow coming from global equity funds, most of which also came from TMB Eastspring and Thanachart Eastspring, the report added.

Master fund firms YTD net flows (THB bn)

Source: Morningstar. As of the end of September.

Pimco continues to lead the master fund firm market, having assets of around THB 65bn, mostly coming from feeder funds that invest in its GIS Income Fund.

Master fund firms AUM (THB bn)

Source: Morningstar. As of the end of September.

Meanwhile, category that had significant growth is global equities, which saw assets increase by nearly 80% this year to around THB 80bn as of the end of September, according to the report. The asset class was also a popular investment theme this year, gaining net inflows of THB 9bn during the first nine months, THB 5.1bn of which coming from Q3.

The report noted that Thanachart Eastspring’s Global Technology Fund, which was launched earlier this year, became the largest global technology fund in Thailand, with assets of THB 7.2bn. The fund feeds its assets into Polar Capital’s Global Technology Fund.

Part of the Mark Allen Group.