Post by : Shakul
Amid escalating worries about global inflation and rising borrowing costs, foreign investors have dramatically ramped up their selling activities across Asian equity markets in May.
Recent data from Reuters highlights that nearly $24.75 billion in Asian equities have been sold by foreign investors this month. Last week alone saw a staggering $17.27 billion exit, marking one of the largest sell-offs in recent regional history.
This trend escalated following the surge of the 30-year US Treasury yield, which reached a peak not seen since 2007. Higher bond yields typically diminish the appeal of stocks, as investors prefer the relative safety of government securities during times of economic uncertainty.
Experts indicate that inflation fueled by ongoing conflicts and tighter financial conditions are leading investors to pull back from growth-oriented Asian markets, with tech-centric exchanges in South Korea and Taiwan being hit hard.
South Korean equities experienced unprecedented foreign outflows amounting to around $13.14 billion in just one week. Taiwan faced significant selling close to $2.88 billion, while Indian markets saw withdrawals nearing $1.35 billion within the same timeframe.
Analysts note that Asian markets are extremely sensitive to fluctuations in US bond yields. Many investors are concerned that prolonged high rates may adversely impact corporate earnings, compress margins, and slow growth across Asia’s export-dominated economies.
Despite weak market conditions, some nations managed to attract foreign investments. Indonesia saw inflows of approximately $511 million, while Thailand reported around $215 million, indicating selective investor confidence in specific Southeast Asian markets.
Financial analysts warn of ongoing volatility in the upcoming weeks, with investors keenly observing inflation trends, central bank actions, and geopolitical developments that could further influence global capital flows and market stability.
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