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Historic high US inflow as money aggressively moving into Dollar Assets; GEM redemptions at 3-year high.

* Flight of capital into US continues with historic high inflow of $82bn this week. In terms of % of AUM, flows are strongest since Mar’18 and Mar’21 period. There is a strong shift of liquidity back into dollar assets.

* In most cases in history, such moves were followed by weaker returns in India (and some EMs too). US Large cap funds saw inflows of $78bn, Midcap of $2.7bn and Small cap of $3.3bn.

* US Smallcap funds are seeing strongest phase of inflow since Nov’20 (post COVID period). This also is a risk factor for Small and Midcap flows for India and other EMs as breadth in US is reviving after many years.

* GEM funds saw another 3-year large outflow of $2.9bn. AXJ funds also saw outflow of $1.6bn. Overall EM funds saw outflow of $4.7bn. On 10-week rolling basis, this round of EM redemption is strongest since Feb’20 period.

* Foreigners continued to pull out money from almost all geographies. Once again, 39/41 countries (EM + DM) saw outflows from foreigners which moved into the US.

* Among EMs, largest outflow was from China ($1.9bn), S.Korea ($693mn), Taiwan ($684mn), India ($440mn) and Brazil ($424mn). Within DMs, Japan saw 3-month large outflow of $680mn while outflow from UK spiked to 1-year high of $1.2bn. France, Germany, Switzerland, Netherlands, Sweden, Denmark, Italy all saw largest redemption in atleast 2-3 years.

* Pressure on India continues to be from allocation-based flows while dedicated fund flow remained soft. India saw outflow of $440mn this week out of which dedicated funds saw small inflow of $90mn. However, within dedicated funds, Small cap funds saw all time high outflow of $70mn & Midcap funds saw outflow of another $70mn.

* Among Sectors, largest US inflow was in IT ($23bn) followed by Financials ($10bn), Consumer Discretionary ($9bn) & Healthcare ($9bn).

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