Economy 2 MIN READ

GRAPHIC-Asian equities see biggest foreign outflows in three months

November 3, 2021By Reuters

By Gaurav Dogra

Asian equities witnessed big outflows in October as concerns about China’s faltering economy and its property sector, and worries that major central banks might taper their stimulus measures, hit sentiment.

Last month, cross-border investors sold equities worth a net $6.05 billion in South Korea, Taiwan, Philippines, Vietnam, Indonesia and India, which was the biggest since July, data from regional stock exchanges showed.

South Korea and Taiwan, where trade links with China are more concentrated, faced outflows of $3.23 billion and $2.05 billion respectively.

Indian and Vietnamese equities also faced outflows of $1.8 billion and $373 million, respectively.

“China’s slowing growth may translate to declining domestic demand and that may have a knock-on impact on economies in the region,” said Jun Rong Yeap, a Singapore-based market strategist at IG.

“Therefore, while there may be expectations for more policy support from Chinese authorities to boost growth, foreign flows may remain capped until there is greater clarity in that regard,” he said.

Meanwhile, Indonesia and Thailand saw cross-border inflows of $928 million and $471 million, respectively.

The U.S. Federal Reserve is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT, a move widely seen as marking a new chapter in the world’s policy response to COVID-19.

“A more hawkish Fed at a time when China is in an economic slump is a poor combination for EM,” Nomura said in a report.

Also, data showed Asian firms’ earnings results have lagged global peers in the on-going September-quarter earnings.

According to Refinitiv Eikon data, 52% of the Asian companies that have reported so far have missed their consensus earnings forecasts for the third quarter, compared with a global average of 41%.

“Amid slowing growth and rising cost inflation, the earnings revision cycle appears to be turning down for a number of sectors,” said Jessica Tea, a Senior Investment Specialist at BNP Paribas Asset Management.

“In China, a number of names, mostly the heavily-weighted names in the e-commerce space, are seeing down revisions amid further regulatory scrutiny.”

Foreign investments in Asian equities

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alex Richardson)


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