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MSCI re-weightings, inject $5 billion into the Aus


    96 Posts.

    A SEISMIC change tomorrow in the way global fund managers invest is expected to inject $5 billion into the Australian market over coming months.

    The influential Morgan Stanley Capital International indexes has upgraded Australia's weighting on the Asia Pacific index from 28.13 per cent to 39.18 per cent, taking effect tomorrow.
    Australia's weight in the world equity index ¨C while still paltry ¨C will lift from 1.47 to 1.51 per cent.
    But analysts were unwilling yesterday to make any bets on how the Australian market would react to the expected volatile trading as fund managers frantically reweight their portfolios in line with the MSCI indexes.
    While blue chip companies ¨C including ANZ, CBA, National Australia Bank, Westpac, Woodside and BHP Billiton

    About $US3 trillion ($5.7 trillion) in funds is tied to the MSCI weightings and, according to broking house CSFB, about $100 billion of global funds is benchmarked to MSCI's Australian index.
    In USA, Domestic stock funds flows to international stock

    Equity mutual funds suffered net outflows of $700 million during the week ended Wednesday, according to estimates from Mutual Fund Trim Tabs. Domestic stock funds leaked $1.1 billion for the second consecutive week, while flows to international stock funds turned positive. The international group collected $300 million, compared with outflows of $2.7 billion the prior week. Investors also turned to bond funds, which took in $500 million during the week. Hybrid funds saw outflows of $100 million. Trim Tabs tracks the daily flows to a fraction of the fund industry and uses those numbers to estimate flows for the entire industry.

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