Predictions of a hawkish Fed policy and fears about the impact of China’s lockdowns on regional economy caused Asian equities to suffer large foreign capital outflows in April.

Refinitiv data for stock exchanges in Taiwan, India, South Korea, the Philippines, Vietnam, Indonesia, and Thailand indicated that overseas investors sold Asian shares worth $14.22 billion for the fourth month in a row.

From January through April, the region’s combined net foreign selling was $45.76 billion, the most in the first four months since at least 2008.

Investors stayed on the sidelines in April, according to analysts, due to rising expectations for aggressive monetary policy tightening in the United States and Chinese lockdowns that impacted regional enterprises.

“Rate-sensitive growth stocks are seeing greater pressure from the discounting of future earnings, which may translate to wider outflows in Taiwan and South Korea,” said Jun Rong Yeap, a market strategist at IG.

Foreign outflows of $8.86 billion, $4.97 billion, and $2.24 billion were recorded in Taiwanese, South Korean, and Indian equities, respectively.

Rising inflation was also a major investment concern in South Korea and India, according to Alicia Garcia Herrero, Natixis’ chief Asia Pacific economist.

In April, consumer inflation in South Korea reached a 13-year high. To combat rising retail prices, the Reserve Bank of India hiked its key lending rate by 40 basis points this week. continue reading

In April, however, foreign inflows into Indonesian, Thai, and Vietnamese stocks totaled $1.57 billion, $289 million, and $175 million, respectively.

“Southeast Asia markets are gaining traction as the region offers the best growth potential,” said Suresh Tantia, senior investment strategist at Credit Suisse.

“In fact, the region is expected to deliver superior earnings growth than its North Asian peers as it benefits from post-pandemic recovery, higher commodity prices, and still accommodative central banks.”

(Adapted from USNews.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Sustainability