Asian equities faced big outflows in January on concerns over a surge in US yields, with the Federal Reserve indicating that it would be more aggressive in tightening its monetary policy this year.
Cross-border investors sold Asian equities worth a net $8.41 billion in South Korea, Taiwan, the Philippines, Vietnam, Indonesia and India in the last month, according to Refinitiv data.
That marked the biggest outflow since July 2021, data from regional stock exchanges showed.
MSCI Asia Pacific Index dropped 4.36 percent in January, marking its biggest monthly decline in six months.
“With the uncertainty revolving around how aggressive the Fed needs to be, rising bond yields seem to prompt some risk-off moves in the markets which led to outflows in Asian equities,” said Jun RongYeap, market strategist at IG.
Indian equities led the outflows with net sales worth $4.4 billion, the biggest since March 2020. Analysts said the outflows were mainly due to higher valuations and profit taking by investors after its rally last year.
Despite the heavy selling by foreigners, India’s NSE index dropped just 0.1 percent last month, propped by resilient buying by its domestic investors.
South Korean and Taiwanese equities also faced outflows worth $3.28 billion and $1.35 billion respectively in January, as their tech stocks were hit by a spike in US interest rates last month.
On the other hand, Indonesian and Thai equities received inflows worth about $400 million each.
