Foreign selling of Asia equities persists as trade tensions heat up

FOREIGNERS continued to pull out money of Asian stock markets in March as trade tensions between the United States and China escalated and dampened the appeal for riskier assets.

Overseas investors sold about $2 billion worth of Asian stocks last month, following their sales of $9 billion in February, data from seven stock exchanges showed.

“The outflows represent a reaction to the increased volatility in global markets which we have seen over the past couple of months,” said Greg Mckenna, chief market strategist at AxiTrader.

Market uncertainty was mainly driven by US President Donald Trump’s move to impose tariffs on imports from China and China’s threat to do the same on US products.

At the end of last week, Mr. Trump directed US trade officials to identify tariffs on $100 billion more Chinese imports, stoking further worries about a trade war.

If the trade tensions persist, it will “both drag Asian equity markets lower and reintensify the outflows from the region,” Axitrader’s Mr. McKenna said.

OUTFLOWS ACROSS MUCH OF THE REGION

Taiwan and Indonesia led the regional outflows in March, each seeing net sales of over $1 billion by foreigners.

Indonesian shares fell over six percent last month, largely due to lesser-than-expected profit growth posted by some blue-chip companies such as PT Telekomunikasi Indonesia ( Telkom) and PT HM Sampoerna for the full-year 2017.

Also, the government’s capping of domestic coal prices undermined market sentiment as the rule is expected to affect miners’ profits.

Philippine equities saw an outflow of $370 million on concerns over its high inflation and current account deficits.

Philippines’ consumer price index increased by 4.3% in March from a year earlier,

exceeding the central bank’s 2-4% target range for 2018 and 2019.

South Korea and Thailand markets saw outflows of $ 450 million and $358 million, respectively.

On the other hand, Indian markets witnessed inflows of over $1 billion helped by higher stock listings in March.

Thomson Reuters data showed 31 Indian companies got listed, raising $ 2.3 billion in March — the highest amount since November last year.

Also, a surprise cut in the government’s borrowing program for the next fiscal year lifted Indian stocks in the last month. —