US equity funds attract record inflows amid Thai market decline

US equity funds have seen the largest inflows this year, spurred by the US economic recovery and expectations of interest rate cuts, while mutual fund investments in Thai stocks have dropped by nearly 10 billion baht, according to Morningstar Research (Thailand).

Nearly 7.8 billion baht has been invested in US equity funds this year, marking a 5.04% increase from 2023, with net inflows recorded for six consecutive months. Funds focusing on the main indices of US stock exchanges, such as the S&P500 and Nasdaq, are the most popular among investors.

Conversely, Thai equity funds have experienced net outflows, particularly large-cap stock funds, which have seen outflows for five consecutive months since the start of the year. The total outflows have surpassed 15.4 billion baht, with nearly 90% of this amount coming from long-term equity funds as they matured gradually. Large-cap stock funds have returned an average of -3.54% this year to date, the lowest among all fund types.

Investors have been turning to global exchanges, including the US and Asian markets, amid a sluggish investment atmosphere in the Thai market. The three Asian markets attracting the most investment are India, Vietnam, and China, with stock funds investing in these markets posting net inflows of 6.92 billion baht since the start of 2024.

India’s stock market has generated strong returns, averaging 23.8% over the past year and 7.22% this year to date. The net inflow of Indian equity funds reached 2 billion baht in March, marking a record high since September 2017.

China’s stock market is beginning to show signs of improvement, with the average performance of Chinese stock funds turning positive. In May, Chinese stock funds recorded a net inflow of approximately 1.5 billion baht, the highest among stock funds.

Supply chain shift

Vietnam’s stock funds have posted a return of 13.1% so far this year and 17.7% over one year. Analysts predict that Vietnam could benefit from a supply chain shift, potentially moving from a frontier market to an emerging market in the future.

Technology stocks have generated the highest average return of 25% over the past year, with a 5.71% gain this year to date. Technology equity funds have seen the greatest net inflow this year, totalling 2.5 billion baht. The growth in this sector is supported by the artificial intelligence trend, which benefits businesses in the supply chain and boosts stock prices.

Morningstar suggests that as policy interest rates decline, technology stocks might gain further attention from investors. It is recommended to closely follow the Federal Reserve’s rate comments to determine the investment trend for the remainder of the year, reported Bangkok Post.