Foreign Investors Shed Asian Stocks in January Amid US Yield Woes, Trade Concerns
Foreign investors sold off Asian stocks in January, spooked by rising US Treasury yields and increased worries over the impact of trade tensions on regional exports.
Data from seven markets - India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines - showed net foreign outflows totaling $12.5 billion.
Analysts cite several factors driving the sell-off, including:
* Elevated US bond yields, which make Asian stocks less attractive to investors
* A stronger US dollar, which increases the cost of investing in Asian markets
* Geopolitical concerns, including the ongoing US-China trade war, contribute to risk aversion among investors
India witnessed particularly strong outflows, with foreign investors selling $9.04 billion worth of stocks in January, the second-largest monthly net sale on record. This outflow is attributed to concerns over slowing domestic growth and global macroeconomic factors.
Foreigners also sold Taiwan and South Korean stocks worth $1.52 billion and $1 billion, respectively. Analysts suggest the sell-offs relate to investors reassessing the growth potential of AI investments amid the emergence of low-cost open-source AI models.
Other markets impacted by foreign sales included Thailand ($335 million), Vietnam ($266 million), Indonesia ($229 million), and the Philippines ($114 million).
Market analysts caution that market volatility and global trade uncertainty continue to weigh on Asian equities. The risk of further retaliatory measures between the US and China remains high, limiting foreign inflows into the region for the foreseeable future.