Asian Stocks See Heavy Outflows in Sept
Foreigners have turned into netsellers of Asian equities after three consecutive months of purchasing. Concerns over the resurgence of COVID-19 and a strengthened U.S. dollar weakened demand for riskier assets.
Cross-border investors sold a combined net total of $6.5 billion worth of equities. This includes Indian, Indonesian, Philippine, South Korean, Taiwanese, Thai and Vietnamese stocks in September. This is based on data from stock exchanges, marking their first monthly net selling since May.
Frank Benzimra, head of Asia equity strategy at Socite Generale, said equity flows into Asia haven’t really reverted since March. Rising concerns over the resurgence of the virus in Europe affected flows in September. Moreover, he said that a correction in U.S. tech stocks affected flows last month.
Foreign Investments in Asian Equities
Benzimra said some catalysts are needed such as a breakthrough in terms of treatment/vaccine for COVID-19 and dollar peaking. In addition, some clear signs that the V-shape recovery of 3Q can be sustained into 4Q and beyond.
Asia’s more effective handling of COVID-19 compared with developed markets could lure inflows in coming months. This was a statement from Paul Sandhu, head of multi-asset quant solutions at BNP Paribas Asset Management.
South Korea, which is a tech reliant country and Taiwanese stocks saw a bigger margin of regional outflows. It was caused by heavy sell offs in tech stocks in the United States. Taiwan had $2.5 billion worth of outflows, while South Korea had $1 billion.
Indian and Indonesian equities had outflows of $1 billion each. Worries over the increasing number of COVID-19 cases triggered this.
As of Wednesday, India’s tally of cases has climbed 6.76 million. Theirs, however, was second only to the United States, while Indonesia had at least 0.3 million COVID-19 cases. Thai had outflows of $732 million while Philippine equities had $306 million.
Bucking the trend, Vietnamese shares received $135 million worth of inflows. The economy picked up pace in Q3 backed by effective containment of the pandemic.
