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CHINA AND INDIA LOSE THEIR APPEAL FOR INVESTORS ON INFLATION FEARS

The Telegraph, June 19, 2008

The world's fund managers are pulling their money out of China and India at a record pace on mounting fears of inflation and are now more pessimistic about global equities than at any time in the past decade.

The latest survey of investors by Merrill Lynch shows that Europe has become the most unpopular region, while Britain is still trapped in the doldrums.

But the big surprise is the sudden change in view on the emerging powers of Asia, as overheating and spiralling oil costs spoil the boom.

"World growth is slowing and yet central banks might still have to tighten monetary policy, that is what is scaring people," said David Bowers, the organiser of the survey. The vast majority of fund managers think earnings forecasts have lost touch with reality.

The exodus from China reached fever pitch this month as investors slashed their net "weighting" position to -58, down from -14 in May. The Shanghai bourse had already fallen by almost half since October.

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