Foreign investment in Asian equities slowed in July amid increased market volatility and heavy selling in technology stocks, compounded by weak economic data and disappointing corporate earnings that dampened risk sentiment, reports Reuters.
Fears of a second Trump presidency also sparked concerns that his administration might impose new tariffs on exports from the region, similar to measures taken during his previous term.
According to LSEG data, foreigners bought just $459 million worth of regional equities in July, down from $7.16 billion of inflows in the previous month.
"The recent headwind on AI/semiconductor stocks globally may also dampen the risk appetite on Korea and Taiwan equities in the near-term."
Taiwan stocks, previously bolstered by a global artificial intelligence (AI)-driven rally, saw their largest capital outflows in 10 months, totalling $4.74 billion, amid a selloff in global tech shares.
South Korean equities attracted $1.2 billion in inflows last month but faced $962 million in outflows during the first four trading days of this month, as concerns over a potential US recession weighed on investor sentiment.
Wall Street's main indexes rebounded Tuesday, as investors jumped back into the market a day after a dramatic sell-off.
"Worries about growth in the US are a negative for export-orientated markets like Japan, Taiwan and Korea; but relatively positive for domestically-oriented markets such as India, Indonesia and mainland China," said Prerna Garg, an equity strategist at HSBC.
Meanwhile, Indian equities attracted substantial attention, garnering a massive $3.87 billion in inflows last month.
"India remains a story of economic strength, with PMI data reflecting broad-based growth in both the manufacturing and services sector," said Yeap Jun Rong, a market strategist at IG.
Malcolm Dorson, a portfolio manager at Global X ETFs, said: "India is not only outperforming on the upside, but the past few days has shown its ability to show less downside through volatility as well."
India's benchmark Nifty index rose 3.92 per cent in the last month, compared with MSCI Asia Pacific's 1.72 per cent gains.
Meanwhile, Vietnam and Thai stocks witnessed $328 million and $42 million worth of outflows while the Philippines received $68 million in inflows.
Foreign inflows into Asian equities slow sharply in July, hit by tech slump
FE Team | Published: August 07, 2024 23:00:31
Foreign inflows into Asian equities slow sharply in July, hit by tech slump
Share if you like