Some of Asia’s biggest stock and bond markets outside China are seeing greater outflows than in previous market crises, and the process may just be getting underway.
Global funds offloaded a net US$40 billion of equities across seven regional markets last quarter, exceeding any three-month period characterized by systemic stresses since 2007. The steepest selling was in tech-heavy Taiwan and South Korea and energy-importing India, while foreign investors also made supersized outflows from Indonesian bonds.
Money managers are pulling out of higher-risk markets as rampant inflation and aggressive central bank interest-rate hikes sap the outlook for global growth. Fears of a US recession and supply-chain disruptions in Europe and China in a global economy still recovering from Covid-19 lockdowns are providing additional reasons to sell.
“We would expect investors to remain cautious toward export-oriented economies and markets with high valuation under the current backdrop,” said Pruksa Iamthongthong, senior investment director for Asia equities at abrdn plc in Singapore. “We expect the outlook to remain uncertain for the technology sector globally on rising recession risks.”
