By Gaurav Dogra
(Reuters) – Asian stocks posted meager inflows in October after selling off the previous month, and analysts expect fears of a global recession and a stronger U.S. dollar to weigh on flows short-term currencies in the region.
Data from stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia and South Korea showed foreigners bought shares with a net worth of $53 million. dollars last month. By September, they had sold shares with a net worth of $8.8 billion.
Last month, MSCI’s broadest index of Asia-Pacific stocks fell 1.97%, compared to a 6% gain for the MSCI World.
“Headwinds over Asia have intensified due to tightening US restrictions on Chinese companies sourcing US technology and lingering doubts over China’s economic recovery,” said research chief Manishi Raychaudhuri. on APAC shares at BNP Paribas.
South Korea received the highest contribution of $2.1 billion, while Indonesia and Thailand received $729 million and $196 million respectively. Taiwan stocks saw a whopping $2.9 billion outflow.
Chart: Monthly Foreign Investment Flows: Asian Equities – https://fingfx.thomsonreuters.com/gfx/mkt/znpnbdqmjpl/Monthly%20foreign%20investment%20flows%20Asian%20equities.jpg
The destocking in the information and communication technology sector is massive, hitting many Taiwanese companies in the semiconductor sector, said Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis.
Vietnam, the Philippines and India also faced exits last month.
“Flows to Asia, particularly North Asia, remain challenging amid fears of a DM (developed market) recession and a strengthening dollar,” BNP’s Raychaudhuri said.
“Both engines should hold together in the short term.”
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Subhranshu Sahu)