As Asian investment markets fell in the wake of the Barings Bank failure last week, Americans started to put money into Asian stock mutual funds for the first time in four months, according to data gathered for Money magazine's Small Investor Index.
News that Barings, a 233-year-old British firm, had been forced to close after losing more than $1 billion trading in Japanese stock futures sent several Asian markets tumbling. In Japan, for example, stocks lost 3 percent, while the Thai market fell 1.2 percent.American investors, apparently figuring that Asian stocks were irresistibly cheap, began pouring money into mutual funds that focus on the region. Eight of nine Asian stock funds that Money surveyed reported net inflows last week. For example, the $332 million Fidelity Japan fund took in a net $4.9 million, and the $393 million Fidelity Pacific Basin fund attracted $3 million. Scudder's $442 million Japan fund and the $137 million T. Rowe Price Japan fund each added $2 million. Until last week, shareholders had redeemed millions of dollars from all four funds since November.
Many analysts think that investors' bargain hunting will pay off. "The Barings bankruptcy is a blip in the long-term upward trend in Asia," said Joseph Battipaglia, chief investment officer at Gruntal & Co. in New York City.
"Asian economies continue to be the fastest growing in the world." Battipaglia expects Asian markets to advance an average of 20 percent this year.
Last week the Money Index, which tracks the typical investor's holdings, rose $45 to a record $50,308. Stocks lost $29, and bonds earned $67. CDs and money funds added $13, while gold lost $6.