In the first quarter of 2024, foreign investors pulled the largest amount of capital from Asian equities in 15 years, totaling $43.73 billion. This unprecedented outflow was triggered by fears surrounding U.S. President Donald Trump’s new tariff policies, which raised concerns about a global economic slowdown and regional impacts, particularly in Asia. The sales included stocks in major markets such as India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines, marking the largest quarterly net sales since at least March 2010.
The outflows were particularly severe in Taiwan, which saw a net $14.13 billion in foreign sales, the highest since at least 2008. South Korea also experienced ongoing foreign disinterest, with net sales totaling $1.46 billion for the eighth consecutive month. Additionally, March alone saw $17.51 billion in equity divestment, the largest monthly outflow since June 2022, indicating rising investor anxiety.
Trump’s announcement of reciprocal tariffs on trading partners, including China, exacerbated the situation, with countries like China facing a significant tariff increase, leading to further fears of a trade war. Ray Sharma-Ong, an investment expert at Aberdeen Investments, pointed out that the tariff hikes would heavily impact countries like China, South Korea, and Taiwan, which were expected to experience further financial de-risking.
As a result of these ongoing tensions, investors are increasingly flocking to safe-haven assets like U.S. Treasuries, gold, and the Japanese yen. The trend suggests that the region may continue to face financial strain, with further capital outflows expected if the global economic uncertainty persists.
Source: Reuters