Foreigners were net sellers of Asian equities for the third consecutive month in March, as higher U.S bond yields and a stronger dollar prompted outflows from the region.
Overseas investors sold a net combined total of $3.18 billion in South Korean, Taiwanese, Philippine, Thai, Vietnamese, Indonesian, and Indian stocks last month, data from stock exchanges showed.
While Asian equities looked lucrative at the start of this year on bets over the region’s faster recovery from the pandemic compared with Western countries, outflows in the first quarter suggest a reversal in sentiment.
A spike in U.S. bond yields and concerns over tightening China policy drove a rotation out of long-duration assets and may further affect the regional equities in the second quarter, Goldman Sachs said in a report.
The brokerage referred Asia’s internet, media, and other high growth sectors such as biotech and healthcare as long-duration stocks as they are more sensitive to the rise in yields.
Taiwan and South Korea, which house many high-flying tech stocks, faced the biggest outflows in the region, witnessing net sales of $3.2 billion and $1.3 billion, respectively.
Foreigners continued to exit Philippine equities for the 17th consecutive month March, struck by fresh lockdowns in capital Manila and nearby provinces after a surge in new coronavirus cases.
Mainland Chinese stocks were up by the early morning. The Shanghai Composite was down by 0.04% to 3,482.33. Hong Kong’s Hang Seng Index was up about 1.97% to 28,939.62.
Japan’s benchmark Nikkei average Nikkei 225 is trading down 1.30 percent at 29,686.97 on Tuesday, while the broader TOPIX 100 fell 1.49 percent to 1,266.47. South Korea’s Kospi was up by 0.20% to 3,127.00.