FIIs to favour NE Asia over India for now, says Macquarie

Mumbai, Feb 14 (PTI) Foreign institutional investors(FIIs) will continue selling Indian equities for investing inthe more profitable north-east Asian markets till mid-2011,Australian investment bank Macquarie said today.

"India will continue to be seen as a funding sourcefor investments into the South Korean and Taiwanese markets,"the bank''s head of strategy for Asia, Michael Kurtz, toldreporters here.

Macquarie''s Head of Research for India, Rakesh Arora,chipped in, saying the net outflow of FIIs within the firstsix weeks of the year stood at USD 2 billion as against therecord USD 29 billion of net inflows last year.

The BSE Sensex, which gained 473 points to end at18,202 today, has had a volatile 2011 till now, and Indiacounts as one of the worst performing global markets, secondonly to the political strife-torn Egypt.

High inflation and political uncertainties in scam-hitIndia are among the factors forcing the FIIs to rework theirIndia strategy, Arora said, adding the latter is the moredisturbing factor amongst the two.

Kurtz said improvement in the economic scenario in thedeveloped world, coupled with low valuations, have made someexport-oriented stocks in South Korea and Taiwan in theinformation technology and consumer durables sectors very dearto the global investors.

"In relative terms, India stands to be a loser here,"he said, adding an improvement in the domestic scenario canresult in investors re-looking their India strategy in thesecond half of the year. .