RPT-China hopes draw billions in foreign funds back to Asia

* Asia markets likely to extend rally on foreign inflows
* Foreign net inflows to Asia at 48-week high
* China, Taiwan, S. Korea biggest winners

(Repeating item first carried on Thursday with no change to
text)
By Faith Hung and Kevin Plumberg
TAIPEI/HONG KONG, April 30 (Reuters) - After a six-month
drought, foreign investors have been sending billions of dollars
back to Asia, a trend some expect to continue on hopes China will
lead the region out of the global economic recession.
Foreigners have poured a net $6 billion into six major Asian
markets since early March, according to BNP Paribas, helping to
boost China, Taiwan and South Korean stocks by up to 35 percent
this year and making them the world's best performers.
Regional government efforts to drive their economies out of
recession by aggressively cutting interest rates and spending
billions of dollars on stimulus packages, especially the $600
billion one implemented by China, are fuelling international
investor appetite for risk after months of caution.
"I think it's time to be in risky assets. The rally we've
seen since March is the start of a new bull market," said Anthony
Bolton, president for investments of Fidelity International, an
affiliate of the world's top mutual fund firm Fidelity
Investments, on a trip this week to Taiwan.
"I started to put in money in September, November, and then
January and March. We are buying China-focused funds," said
Bolton, whose contrarian bets made him a top U.K. fund manager
for more than two decades.
China's official Purchasing Managers' Index (PMI) for March,
rose to 52.4 from 49.0 in February, marking its first time in
expansionary territory since September, a rebound that Beijing
said the economy may have bottomed. [nPEK25397]
The index is a key survey of the manufacturing sector,
showing managers felt cautiously optimistic about the next few
months.

To view two graphs on foreign fund inflows and stock market
gains in Asia since March, please click on:
https://customers.reuters.com/d/graphics/AS_FLWS0409.jpg
https://customers.reuters.com/d/graphics/AS_FLWS20409.jpg

CHINA LEADS
The massive inflows to China plays and other emerging markets
contrast with outflows from developed markets, a sign foreign
investors bet China will lead Asia out of the global recession.
Emerging market equity funds have received inflows of $7.3
billion so far this year, compared with outflows of $56.1 billion
for developed market equity funds, fund flow tracker EPFR Global
said in a recent report.
In the past week alone, foreigners purchased $1.6 billion
worth of Asian equities, their second-highest buying level in 48
weeks. Meantime, mutual fund buying was at a 50-week high of $946
million, Nomura International said in a report.
China equity funds absorbed another $243 million and Taiwan
equity funds posted their highest weekly inflows in nearly a
year, said EPFR.
Fund managers said they favoured shares of infrastructure,
raw materials, personal computer makers and China plays on
expectations they will continue to benefit from China's massive
economic stimulus.
"China's determination to sustain 8 percent-plus GDP growth
remains the cornerstone of the latest surge in risk appetite,"
EPFR Global senior analyst Cameron Brandt wrote in the report.
Bratin Sanyal, head of Asian equity investment for ING Investment
Management in Hong Kong, shared a similar view.
"We believe the bigger economies in Asia are going to come
out of the downturn more quickly. China, India and Indonesia
remain our favourite markets along with Singapore and Hong Kong
because they add some stability to our portfolios with companies
that are liquid.

STABILISING FORCE
Fund managers said recent interest in Asia by foreign funds
is likely to stabilise those markets, as many fund managers buy
in on dips after missing initial rallies.
"Many institutional investors are worried stocks have risen
too much, too fast. They are waiting for any pull-back as an
opportunity to build up their positions," said Wendy Kuo, chief
investment officer of Yuanta Funds.
Yuanta's funds, with $3.3 billion of client assets, recently
bought shares of Ping An Insurance <2318.HK>, Nine Dragon Paper
<2689.HK> and carmaker Dongfeng Group <0489.HK>, all Chinese
firms listed in Hong Kong, Kuo said.
China-listed shares in its two exchanges in Shanghai and
Shenzhen are closed to all but a handful of foreign buyers.
Jamie Cumming, a senior investment manager on the global
equity team of Aberdeen Asset Managers in Edinburgh, said he
gradually added cyclical names, materials and industrials,
including Chinese oil refiner PetroChina <0857.HK> and Taiwanese
chip maker TSMC at the start of the year.
Still, some fund managers advised caution.
"Globally, policymakers have added $2 trillion in stimulus
but global equity markets have lost $15 trillion in market cap
since the peak of the last bull market," said Mark Matthews, Asia
Pacific strategist with Fox Pitt Kelton in Hong Kong.
"People are misconstruing some of the sequential improvements
in numbers for an economic recovery. It's not an economic
recovery and I don't think we are anywhere near an economic
recovery."
($1=T$33.2)
(Editing by Doug Young)
((Reuters Messaging: faith.hung.reuters.com@reuters.net; +886 2
2508-0815))
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Keywords: FUNDS/ASIA

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Keywords: FUNDS/ASIA =2

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