Asian Equities Foreign Inflow: In May, Asian equities foreign inflow surged to a 15-month high. Investors returned as fears over U.S. tariffs eased. Foreign buyers pumped $10.65 billion into Asian stocks, marking a sharp rebound after four months of selling. Key markets like India, Taiwan, and South Korea saw strong inflows.
The rally followed a 90-day pause on new U.S. tariffs. Improved earnings forecasts also boosted confidence.
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Asian Equities Foreign Inflow: Insights
- Strong rebound: Foreign investors bought $10.65 billion in Asian stocks, the highest since February 2024.
- Top performers: Taiwan led with $7.28 billion inflows, followed by India ($2.34 billion).
- Trade fears ease: A temporary halt in U.S. tariffs revived investor interest.
- Upgraded forecasts: Goldman Sachs raised Asia’s 2025-26 earnings growth outlook to 9%.
- AI boost: $600 billion in AI investments may benefit Taiwan and South Korea.
Background
Earlier in 2024, U.S. trade policies worried investors. New tariffs in April hurt Asian export expectations, and many withdrew funds, fearing weaker margins. However, a 90-day pause in tariff hikes calmed markets. China’s economic recovery also helped. Analysts now expect stronger growth in Asia. The weaker dollar further supported foreign investments.
Main Event
May saw the largest Asian equities foreign inflow in over a year. Data from LSEG confirmed $10.65 billion in net purchases. Taiwan attracted $7.28 billion, its highest since November 2023. India followed with $2.34 billion in foreign buying. South Korea, Indonesia, and the Philippines also gained. Only Thailand faced net selling ($491 million).
Goldman Sachs upgraded its Asia earnings forecast. It now expects 9% growth in 2025-26. The revision reflects stronger Chinese and U.S.-linked markets. AI investments from Saudi Arabia could further lift tech-heavy economies.
The MSCI Asia-Pacific Index rose 8.8% this year. It outperformed global peers like the S&P 500. The rally signals renewed confidence in Asian markets.
Investors pass by a digital display flashing live stock market updates at a brokerage firm in Bangkok, Thailand, on April 9, 2025.
Photo Credits: REUTERS.
Implications
The surge in Asian equities foreign inflow benefits regional economies. Export-driven markets like Taiwan and South Korea gain. Local businesses may see higher valuations. Governments could attract more foreign capital. However, a weaker dollar may reduce some gains. Investors remain cautious about future U.S. trade policies.
Conclusion
Asian stocks are back in favor after months of outflows. The Asian equities foreign inflow surge reflects easing trade tensions. If global conditions stay stable, the rally could continue. Experts warn of risks from U.S. policy shifts. Yet, for now, Asia remains a top choice for investors.
