Asian stocks in 2022 suffer biggest foreign outflows since 2008 global crisis

Jan 4 (Reuters) – Foreign investors withdrew more money from emerging Asian equities in 2022 than they had done in any year since the global financial crisis in 2008, as rising US interest rates pulled funds towards dollar assets.

Data from stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia, and South Korea showed foreigners sold equities worth USD 57 billion last year, the biggest outflow since 2008.

After four straight 75-basis point hikes earlier in 2022, the US Federal Reserve raised its overnight borrowing rate by another 50 basis points in December.

Due to the hikes, the yield on safer 10-year US Treasuries climbed about 230 basis points to 3.83% last year, which hit the foreign demand for riskier regional equities.

Taiwanese equities faced outflows worth USD 41.6 billion last year, leading the regional sales, while India and South Korea witnessed an outgo of USD 15.4 billion and USD 9.6 billion, respectively.

Hit by falling foreign demand and a worsening economic outlook, the MSCI’s Asia Pacific index plunged 19.4% last year – the biggest fall since dropping 43.3% in 2008.

Some analysts expect more outflows, at least in the first half of the year, as US interest rates are expected to rise further this year.

“The first half of the new trading year could continue to bring a cautious tone in the region, as market participants brace for further economic impact from tighter global central banks’ policies, along with risks of China’s reopening triggering cross-border virus spreads,” said Yeap Jun Rong, a market strategist at IG.

In December, emerging Asian equities, excluding Japan and China, witnessed net sales worth USD 3 billion, with Taiwanese, Indonesian and South Korean equities facing outflow of USD 2.55 billion, USD 1.34 billion, and USD 1.31 billion, respectively.

On the flip side, India, Vietnam, and Thailand received net inflows of USD 1.36 billion, USD 559 million and USD 372 million, respectively, in December.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Simon Cameron-Moore)