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Asian equities clock biggest foreign outflows since March 2020

Thai and Indian equities saw net sales of $1.1 billion and $389 million, respectively.

Asian equities clock biggest foreign outflows since March 2020
Reuters
2 min read Last Updated : Jun 03 2021 | 2:37 PM IST

Asian equities in May clocked their biggest foreign outflows in 14 months due to a spike in COVID-19 cases in the region and as growing inflationary pressure tempered risk appetite.

Data from stock exchanges in South Korea, Taiwan, Philippines, Thailand, Vietnam, Indonesia and India showed foreigners net sold a combined total of $12.05 billion in regional equities, the highest since March 2020.

"The outflows in May were driven by different reasons in different markets, but the common thread was COVID-19 resurgence," Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas, said.

Graphic: Foreign investments in Asian equities 

He said markets such as Taiwan, Thailand and India, which faced a resurgence in COVID-19 cases, were sold down by FIIs in anticipation of decline in consumption and cuts in earnings estimates.

South Korea led outflows, seeing net sales of $7.97 billion last month on concerns over rising inflation, which has reinforced calls for gradual monetary tightening.

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Taiwan faced outflows worth $2.1 billion, with the sub-tropical nation dealing with its worst drought in history after no typhoons directly hit the island last year, meaning much less rain.

Thai and Indian equities saw net sales of $1.1 billion and $389 million, respectively.

India's daily infection rates have been falling in recent weeks, offering hope that a devastating second week is ebbing.

However, worries still linger, as just 3% of the country's population have been vaccinated so far, which is the lowest rates among the 10 countries with the most COVID-19 cases.

BNP Paribas' Raychaudhuri said he expects foreign flows to improve selectively in a few Asian markets in the second half of 2021, particularly in Taiwan and South Korea.

"Korea and Taiwan should benefit in the medium-term as corporate earnings in both markets are strongly driven by global consumption revival - particularly that in the developed economies - a trend that we believe is likely to last for a while," he said.

 

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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Topics :Asian SharesWorld sharesMarkets

First Published: Jun 03 2021 | 2:34 PM IST

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