Taiwan and South Korea drive a strong return of foreign inflows to EM Asia ex-China, while India's domestic fund inflows remain elevated

Overview

This is Goldman Sachs' EM Weekly Fund Flows Monitor published on 2026-04-10, focusing on global and emerging market equity fund flows, FII/DII flows, mutual fund positioning, and southbound Stock Connect flows. The core message is that EM Asia ex-China saw a clear foreign inflow rebound this week, led by Taiwan and South Korea; India continued to see net foreign outflows, but domestic mutual fund and SIP flows remained strong; global equity fund inflows expanded significantly versus last week.

Core views

The report argues that recent fund flows show clear regional divergence. On the foreign-investor side, EM Asia ex-China saw US$7.8bn of inflows this week, led by South Korea and Taiwan, while India recorded US$1.8bn of outflows and Brazil also contributed to modest selling in non-Asia EM. On the positioning side, preliminary EPFR data indicate that EM funds favor Brazil and Mexico, are underweight Taiwan, and have meaningfully increased exposure to South Korea while reducing exposure to China and Taiwan over the past month. On the domestic side, India's local equity mutual fund inflows and SIP inflows remained strong, cushioning the impact of foreign selling.

Analysis framework

The report centers on weekly fund flow data and preliminary monthly positioning data, combining FII, DII, EPFR mutual fund, AMFI, Stock Connect, and global regional fund flow data to compare net inflows, outflows, overweighting, underweighting, and recent changes across markets, regions, and sectors. The analysis is not about individual company fundamentals, but about cross-market capital allocation, investor type, and flow momentum.

Methodology notes

• fund_flow_analysisFII/DII fund flow monitoring

  Separate the buying and selling direction of foreign institutional investors and domestic institutional investors

  FII reflects the net buying and selling of local equities by overseas institutions, while DII reflects inflows or outflows from domestic institutions; together they help assess both external and internal support for market liquidity.

• positioning_analysisEPFR preliminary mutual fund positioning

  Measure regional and sector preferences through mutual funds' overweight and underweight positions versus benchmarks

  Based on preliminary March EPFR data covering about 25% of AUM already reported, the report examines changes in relative benchmark allocations for EM and Asia funds at the country and sector level.

• flow_momentumWeekly and year-to-date flow comparison

  Compare this week's flow changes with last week, year to date, and cumulative changes since recent lows

  This approach helps distinguish short-term rebounds, sustained trends, and opportunistic buying after large prior outflows.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• South Korea equities

  Primary beneficiary of FII inflows and mutual fund adding

  Strengths

  This week saw US$3.5bn of FII inflows, and it has had the largest EM fund addition over the past month.

  Weaknesses

  Since the Iran conflict, cumulative foreign selling is about US$20bn, indicating that medium-term funding pressure has not fully healed.

  Comparison

  Compared with China and Taiwan, South Korea has been more favored in recent mutual fund positioning changes.

  Risks

  If global technology hardware and semiconductor flows continue to leave, the Korean market may be weighed down by sector concentration.

• Taiwan equities

  A market with strong FII inflows this week but still underweight in funds

  Strengths

  This week saw US$6.1bn of FII inflows, making it an important source of EM Asia ex-China foreign buying.

  Weaknesses

  Preliminary EPFR data show EM funds are most underweight Taiwan, and it was still reduced over the past month.

  Comparison

  Weekly flow performance was stronger than India and non-Asia EM, but positioning preference was weaker than South Korea.

  Risks

  Outflows from tech hardware and semiconductors may continue to pressure Taiwan market flows.

• India equities

  A market with foreign outflows but strong domestic support

  Strengths

  Equity mutual fund inflows were US$4.3bn in March, SIP inflows reached a record US$3.4bn, and DII inflows this week were driven by India at +US$2.3bn.

  Weaknesses

  FII flows were -US$1.8bn this week, showing that overseas money is still leaving in the short term.

  Comparison

  Compared with the foreign buying seen in South Korea and Taiwan, India relies more on domestic capital to absorb flows.

  Risks

  If FII outflows persist, it remains to be seen whether domestic flows can continue to fully offset the foreign pressure.

• Brazil equities

  An EM fund overweight market but with near-term foreign outflows

  Strengths

  EM funds are most overweight Brazil/Mexico, and since the Iran conflict Brazil still has about US$2bn of buying.

  Weaknesses

  This week's non-Asia EM selling was mainly driven by Brazil at -US$240mn.

  Comparison

  Brazil is preferred over Taiwan in positioning terms, but its near-term weekly flow is weaker than North Asia markets.

  Risks

  If non-Asia EM selling widens, Brazil could shift from relative preference to flow pressure.

• China equities

  A market that mutual funds have recently reduced exposure to

  Strengths

  Some sectors, such as China Industrials, saw meaningful increases in relative benchmark allocation.

  Weaknesses

  EM funds reduced China over the past month, and China Banks as well as Tech H/W & Semis saw notable cuts.

  Comparison

  Compared with South Korea's increased exposure, China has looked weaker in the recent one-month flow allocation changes.

  Risks

  If the underweighting in banks and tech hardware semiconductors continues at the sector level, overall flow recovery may remain limited.

Key data

• EM Asia ex-China FII inflows this weekUS$7.8bnDriven mainly by South Korea at +US$3.5bn and Taiwan at +US$6.1bn, while India was -US$1.8bn.
• Non-Asia EM foreign outflows this weekUS$360mnBrazil was the main drag at about -US$240mn.
• Global equity fund inflows this weekUS$37bnLast week saw US$12bn of inflows; within developed markets, US funds were net buyers of US$23bn.
• GEM fund inflows this weekUS$2.1bnYear to date, GEM funds have accumulated US$56bn of inflows.
• Indian equity mutual fund inflows in MarchUS$4.3bnUp 49% month on month.
• India SIP inflows in MarchUS$3.4bnUp 7% month on month and a record high.
• Stock Connect southbound outflows this weekUS$1.5bnStill +US$28bn year to date.
• Cumulative foreign selling in EM equities ex-China since the Iran conflictUS$62bnTaiwan at -US$23bn and South Korea at -US$20bn were the main selling markets, while Brazil at +US$2bn was a buying market.
• FII outflows since the February peak and recent reboundAbout US$79bn of outflows, followed by net buying of US$9bn from the recent lowThis indicates some replenishment after the earlier sharp foreign selling.

Impact & implications

The flow signals imply for asset allocation that foreign inflows into EM Asia ex-China improved short-term risk appetite, with South Korea and Taiwan receiving clear support this week, although both still face large cumulative foreign selling over the historical window. India's combination of foreign outflows and strong domestic mutual fund inflows suggests local capital may continue to cushion the market. At the global level, stronger equity fund inflows and increased US fund buying improve the funding backdrop for risk assets, but Japan and parts of non-Asia EM still saw outflows, showing that the rotation is not broad-based.

Risks

• The report relies partly on preliminary EPFR data, covering about 25% of reported AUM, and the final data may revise the conclusions.
• Weekly fund flows are volatile, and a single week of FII buying does not necessarily mean a long-term trend reversal.
• The cumulative outflow backdrop since the Iran conflict suggests that recent buying may only be a partial rebound after earlier heavy selling.
• At the sector level, Tech HW & Semis and Banks saw significant outflows, which may drag on related market performance.
• Southbound Stock Connect flows were negative this week, suggesting Hong Kong-related funding momentum may weaken at the margin in the near term.

What to watch

• Whether FII inflows into South Korea and Taiwan continue in subsequent weekly data.
• Whether the full March EPFR data confirm increased exposure to South Korea and reduced exposure to China/Taiwan.
• Whether India's domestic mutual fund and SIP inflows continue to offset FII selling.
• Whether sector flows in Tech HW & Semis, Banks, and other areas improve.
• Whether global equity fund inflows spread further from the US to Europe, Japan, and EM.
• Whether southbound Stock Connect flows continue to show weekly outflows after the strong year-to-date inflows.