TD: Asia Flows - Diverging paths

TD Securities note that "Asian assets have stabilised after a painful Q1. Performance has diverged, with trade driven markets outperforming and domestic driven markets underperforming. This is reflected in the likes of firmer TWD, KRW, SGD and CNH. We expect this to continue in the weeks ahead. Separately, USD credit has bounced back from its early April lows."

• "Our calculations show that YTD Asia foreign equity outflows total $14bn but this is less negative than at the end of Q1. Equity outflows from India have increased as activity has weakened, joining Indonesia, Malaysia, Thailand and Vietnam in recording QTD equity outflows. In contrast, there have been robust equity inflows into Korea and Taiwan, a reversal of the picture seen in Q1. Overall equity flow momentum is positive."
• "Inflows into Asia local currency bonds have registered a broad based strengthening though China recorded bond outflows in March. Indonesia and Thailand have benefitted most though Indonesia still registers YTD outflows. Inflows may be at risk from a negative excess yield, however. We expect curve steepening, with the front end of Asia curves overly hawkish."