Foreign Inflows into Asian Equities Slow Sharply in July Amid Tech Sector Slump
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Foreign inflows into Asian equities slow sharply in July, hit by tech slump
Aug 7 (Reuters) - 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. 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. "Global investors tend to reduce their emerging market portfolios during times of stress," said Jason Lui, the head of equity and derivative strategy for Asia Pacific at BNP Paribas. "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 U.S. recession weighed on investor sentiment. "Worries about growth in the U.S. 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% in the last month, compared with MSCI Asia Pacific's 1.72% gains. Meanwhile, Vietnam and Thai stocks witnessed $328 million and $42 million worth of outflows while the Philippines received $68 million in inflows. (Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)
[2]
Foreign inflows into Asian equities slow sharply in July, hit by tech slump
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 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. 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. "Global investors tend to reduce their emerging market portfolios during times of stress," said Jason Lui, the head of equity and derivative strategy for Asia Pacific at BNP Paribas. "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 U.S. recession weighed on investor sentiment. "Worries about growth in the U.S. 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% in the last month, compared with MSCI Asia Pacific's 1.72% gains. Meanwhile, Vietnam and Thai stocks witnessed $328 million and $42 million worth of outflows while the Philippines received $68 million in inflows. (Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)
[3]
Foreign inflows into Asian equities slow sharply in July, hit by tech slump
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. "Global investors tend to reduce their emerging market portfolios during times of stress," said Jason Lui, the head of equity and derivative strategy for Asia Pacific at BNP Paribas. "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 U.S. recession weighed on investor sentiment. "Worries about growth in the U.S. 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% in the last month, compared with MSCI Asia Pacific's 1.72% gains. Meanwhile, Vietnam and Thai stocks witnessed $328 million and $42 million worth of outflows while the Philippines received $68 million in inflows. (Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)
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Foreign investment in Asian equities experienced a significant slowdown in July, primarily due to a slump in the technology sector. This shift in investor sentiment has impacted various Asian markets, with some countries seeing outflows while others managed to attract inflows.
Sharp Decline in Foreign Inflows
Foreign investors significantly reduced their investments in Asian equities during July, with net purchases dropping to $2.2 billion, a stark contrast to the $15.73 billion inflow observed in June
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. This dramatic slowdown has been primarily attributed to a slump in the technology sector, which has traditionally been a strong driver of foreign investment in Asian markets.Impact on Individual Markets
The effects of this slowdown were not uniform across Asian markets. South Korea experienced the most significant impact, with foreign investors withdrawing $3.85 billion from its equities in July
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. Taiwan, another market heavily reliant on technology stocks, saw outflows of $676 million. These outflows reflect the broader trend of investor caution towards tech stocks in the region.Positive Inflows in Some Markets
Despite the overall slowdown, some Asian markets managed to attract foreign investments. Indian equities, for instance, saw inflows of about $2.83 billion in July
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. Thailand and Indonesia also experienced positive inflows, with $1.01 billion and $215 million respectively. These figures suggest that investors are still finding value in certain Asian markets, albeit more selectively.Factors Influencing Investment Trends
Several factors have contributed to the current investment landscape in Asian equities. The global economic outlook, particularly concerns about inflation and potential recession in major economies, has played a significant role. Additionally, the performance of the Chinese economy, which has shown signs of slowing growth, has impacted investor sentiment across the region.
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Technology Sector Challenges
The technology sector, which has been a key driver of Asian market performance in recent years, faced particular challenges in July. Concerns about valuations, regulatory pressures, and global supply chain issues have contributed to the sector's underperformance. This has led many foreign investors to reassess their positions in tech-heavy markets like South Korea and Taiwan.
Looking Ahead
As we move forward, the trajectory of foreign investments in Asian equities will likely depend on several factors. These include the performance of the global economy, the resolution of supply chain issues, and the ability of Asian tech companies to navigate regulatory challenges. Investors will be closely watching economic indicators and policy decisions in major Asian economies to inform their investment strategies in the coming months.
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