FII outflow in 2011 : highest among BRIC Nations

Even as Foreign Institutional Investors (FIIs) have been selling across markets and pulling out money, their outflow was highest from India in 2011, compared with BRIC peers (Brazil, Russia, India and China) and other emerging markets. According to data compiled by EPFR Global, FIIs withdrew over $4 billion from India in 2011, against an inflow of $1.35 billion in 2010. EPFR Global tracks foreign fund flows across markets and different asset classes.

Emerging European countries and China are other markets where FII outflows during 2011 were significant at $3.7 billion, followed by Brazil that saw $2.35-billion being pulled out. Foreign equity funds have been withdrawing from these markets consequently since last seven weeks as, “Headwinds from Europe, uncertainty about China’s prospects next year and stubbornly high levels of inflation in many countries kept investors on edge. The latest redemption’s were blunted by the reinvestment of dividends from some major Global Emerging Markets (GEM) Equity Funds, but 2011 ended with both Latin America and EMEA (Europe, Middle East and Africa ) Equity Funds setting new outflow records,” said Cameron Brandt, Global Markets Analyst with EPFR


While gravity of outflows from India was high, according to him, the year also saw a general souring towards theme-driven fund groups. Dedicated BRIC Equity Funds posted outflows in 48 of the year’s 52 weeks and flows into Frontier Markets Funds (like funds for investing in markets like Vietnam, Argentina etc) tailed off. The latest theme, the so-called CIVETS (Colombia, Indonesia, Vietnam, Egypt, Thailand and South Africa) markets, also lost momentum.”

While EPFR Global data are widely accepted, they are at wide variance with the data provided by the Securities and Exchange Board of India (Sebi). According to the Sebi data, FIIs’ were net sellers in the Indian capital market, including the primary market, by $4.95 billion, against $4 billion as per EPFR. Data shown on exchanges say FIIs were net sellers in 2011 at $5.5 billion.