Trump win triggered 2024 exit by abroad traders from Asian equities

By Gaurav Dogra and Patturaja Murugaboopathy

(Reuters) – Abroad traders turned internet sellers of Asian equities in 2024, primarily as a result of a surge in promoting within the final quarter amid issues that U.S. President-elect Donald Trump’s commerce insurance policies would possibly hit Asian economies.

They bought a internet $15.8 billion price of equities in Taiwan, South Korea, India, Thailand, Indonesia, Vietnam and the Philippines final 12 months, after shopping for $26.6 billion in 2023.

That they had invested $14.67 billion within the first three quarters, inspired by expectations of Federal Reserve easing and regional progress. However they later shifted to accelerated promoting, hit by a stronger greenback and better U.S. yields.

Final 12 months, Taiwan led the area with outflows of $12.4 billion, adopted by Thailand and Vietnam with internet promoting of $4.11 billion and $3.63 billion.

The macro backdrop for Asian equities stays difficult this 12 months, stated Timothy Moe, an analyst at Goldman Sachs.

Early-year market headwinds embody combined financial knowledge, rising U.S. 10-year yields and a stronger greenback, together with potential new U.S. tariffs on Asia-Pacific economies, persistently excessive financial coverage uncertainty and geopolitical dangers, Moe added.

Larger returns in different markets additionally pulled abroad traders away from Asian markets final 12 months, with MSCI Asia Pacific index yielding simply 7.23% in 2024, a lot decrease than MSCI World‘s (MIWD00000PUS) 15.73% and MSCI United States’ 23.4%.

Trump, who takes workplace on Jan. 20, has pledged to implement a ten% tariff on all international imports to the U.S. and a 60% tariff on Chinese language items, measures which can be anticipated to have an effect on different Asian exporters as a result of built-in provide chains with China.

Though Trump’s threats might ultimately be negotiated decrease, “banking on much less aggressive tariffs at this stage might appear untimely,” stated Yeap Jun Rong, market strategist at IG, including: “Inflows should still keep restricted for now, till extra coverage readability emerges”.

“We consider overseas traders will likely be selective on the markets and sectors as we envisage extra divergence throughout Asian fairness market based mostly on their very own home coverage agenda vs. sensitivity to US financial and commerce insurance policies,” stated Jason Lui, Head of APAC Fairness and Spinoff Technique, BNP Paribas (OTC:BNPQY).