Last month, cross-border investors sold equities worth a combined net total of $4.5 billion in South Korea, Taiwan, Philippines, Vietnam, Indonesia and India, data from stock exchanges showed.
South Korea led the outflows, seeing $5.1 billion worth of net sales last month.
“I think the narrative surrounding Asia continues to be the ongoing risks around COVID-19, leading to a divergence in economic growth between Asia and its Western counterparts,” said Jun Rong Yeap, a Singapore-based market strategist at IG.
“For South Korea specifically, its central bank has chosen to hike rates last month despite ongoing COVID-19 risks, in consideration for its rapidly growing household debt.”
The Bank of Korea raised its policy rate last month as ballooning consumer debt created new threats for the economy.
Asia’s factory activity lost momentum in August as a rapid spread in the Delta coronavirus variant disrupted supply chains, raising concerns that faltering manufacturing will add to economic woes caused by slumping consumption.
China’s factory activity also slipped into contraction in August for the first time in nearly 1-1/2 years as lockdowns, supply bottlenecks and high raw material prices weighed on output.
“Slower China growth will have implications for the rest of Asia as well, and I am sure the downward revaluation exercise for China equities is not yet done,” Jeffrey Halley, a senior market analyst, Asia Pacific at OANDA.
Foreigners also sold Vietnamese equities worth a net $296 million, as a record surge in new infections hit manufacturing activity.
Meanwhile, Indonesia, India and Thailand received foreign inflows worth $311 million, $284 million and $179 million, respectively, last month. Taiwan and Philippines also received marginal inflows.
