* Asian equities see biggest monthly inflows in more than a
decade
* Currencies gallop to milestone highs over softening dollar
* Investors say there's more cash to come
By Tom Westbrook and Stanley White
SINGAPORE/TOKYO, Dec 9 (Reuters) - Money surging into Asia
has equities in India and South Korea at record highs and the
region's currencies on the cusp of their best ever quarter,
signalling a shift in capital flows that investors say is set to
lift Asian asset prices even higher.
At $17.5 billion, foreign buying of Asian stocks was the
heaviest in a dozen years last month and the wall of cash that
streamed into regional bond markets totalled $15.2 billion.
Money managers expect the rising tide has a long way to run
as investors rush back into the region, attracted by low
valuations, high yields in some markets and signs that most
economies are rebounding.
Net equity outflows still amount to $34.1 billion so far in
2020 after pandemic-induced selling early in the year, and net
bond inflows outside China are only $1 billion, suggesting
plenty of dry powder can be put to work.
"It won't happen in a clear smooth line and there will be
volatility," said Nader Naeimi, head of dynamic markets at AMP
Capital.
"But some fast money seems to be getting interested again,"
he added, referring in particular to flows into Thailand, where
foreigners bought $1.1 billion in equities in November and the
stock market .SETI had its best month in 17 years.
India and South Korea have been other favoured destinations,
and benchmark indexes there have scaled record peaks, lifting
the S&P BSE Sensex .BSESN by 78% and the Kospi .KS11 by 91%
from March lows.
"We see an opportunity to rotate away from China," said
Andrew Gillan, head of Asia ex-Japan equities at Janus Henderson
Investors in Singapore, who is bullish on Seoul-listed chip
makers and banks in less-loved markets in Southeast Asia.
"We like China, but from an asset allocation perspective, it
is less likely that China will outperform in the next 12 months
simply because, in the 20 years I've been investing, this is the
strongest five years for China relative to the region."
Prashant Bhayani, Asia chief investment officer at BNP
Paribas Wealth Management, said Singapore and Indonesia are
attractive thanks to exposure to cyclical and value stocks.
STICKY FINGERS
Equity and bond flows have also driven large shifts in
currency markets, sending Asian currencies to multi-year highs,
illustrating the depth of money moving into the region.
MSCI's Asia ex-Japan currency index is up a record 4% this
quarter .MIAX00000CUS at all-time high and it is on track for
an annual gain of 6% - double the rise in the emerging markets'
currency index .MIEM00000CUS .
To be sure, the hardest hit markets remain below
pre-pandemic levels, and others feel overdue for a pullback,
with recent gains extremely vulnerable to outright reversal, as
March's experience made clear.
"There's no such thing as sticky money for Indonesia, let's
be clear about that," said SooChong Lim, head of Asia corporate
research, at J.P. Morgan in Hong Kong.
"(But) this fund flow is very different...now the global tap
is flowing and Indonesia stacks up quite well," he said. "For
Indonesia, the best barometer on the sentiment is the rupiah."
The currency is up more than 5% since October IDR= and is
near a five-month high as investors have dived in to the bond
market, driving 10-year sovereign debt yields ID10YT=RR down
by some 70 basis points but still well above 6%.
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Foreign investments in Asian equities https://tmsnrt.rs/3lkaYOw
Asian equities in November see biggest foreign inflows in over a
decade is no shot in the arm yet for emerging markets
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