February 2, 2023

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Pinoy Trekker – We go anywhere

Asian stocks are drawing the highest monthly foreign inflows in two years, according to Reuters

©Reuters. FILE PHOTO: A general view of the Bombay Stock Exchange (BSE) in Mumbai, India January 21, 2021. REUTERS/Francis Mascarenhas/File Photo

By Gaurav Dogra

(Reuters) – Monthly foreign net flows into Asian equities hit a two-year high in November on hopes the US Federal Reserve may slow the pace of its rate hikes.

Expectations that China would gradually ease its zero-COVID policy and open up its economy also lifted sentiment.

Data from stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia and South Korea showed that foreigners net-purchased $15.18 billion in shares in November, the most since November 2020.

Monthly foreign investments flow into Asian stocks

Minutes from the Federal Reserve’s recent monetary policy meeting showed that most policymakers saw the need to slow rate hikes to counteract the economic downturn and maintain financial stability.

The MSCI Asia Pacific Index rose 14.8% last month, its biggest monthly gain in about 24 years, after being hit by aggressive rate hikes by the Federal Reserve earlier this year.

Taiwanese stocks attracted $6.06 billion in foreign inflows last month, the largest amount since 2008, while India and South Korea received $4.43 billion and $3.04 billion, respectively.

Meanwhile, Thai and Vietnam stocks attracted $822 million and $683 million in net buys, respectively. Foreign investors also made small net purchases in the Philippines and Indonesia last month.

Analysts are also bullish on inflows into Asia’s emerging markets as the dollar has fallen sharply in recent weeks.

The dollar index hit a more than 5-month low this week on bets that the US Federal Reserve would slow the pace of its interest rate hikes by 75 basis points after four straight hikes.

“Price remains locked in a downtrend, which could continue to provide a supportive environment for foreign inflows into Asian equities later in the year,” said Yeap Jun Rong, market strategist at IG.