Money flows into Asian equities in June on trade optimism, Latest Business News - The New Paper

Money flows into Asian equities in June on trade optimism

This article is more than 12 months old

Foreign investors turned net buyers of Asian stocks in June as optimism ahead of a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, along with expectations of US interest rate cuts, bolstered sentiment.

Overseas investors purchased a net US$4.2 billion (S$5.7 billion) worth of equities in June, data from stock exchanges in South Korea, Taiwan, India, Thailand, Philippines, Indonesia and Vietnam showed.

The leaders of the US and China agreed late last month to restart trade talks after Mr Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing. A collapse in trade talks had prompted sharp foreign outflows from Asian equities in May.

"The US-China trade truce at the G20 meeting will likely support further inflows over the weeks ahead but this will have to be balanced against the impact of slowing growth and elevated equity valuations in some countries (India, Indonesia)," noted Mr Mitul Kotecha, a senior emerging markets strategist at TD Securities.

"On balance, we expect portfolio inflows to Asia to continue to strengthen but to remain discriminatory."

In June, Thai equities attracted US$1.5 billion worth of foreign money after Prime Minister Prayut Chan-o-cha secured a majority in parliament, ending the country's political uncertainty.

Sino-US trade optimism helped Taiwan and South Korea to secure higher inflows last month, as the two countries have extensive ties with tech companies in China and are part of their supply chains.

But India received just US$374 million worth of inflows, the lowest in five months, as concerns over sluggish consumption and slowing growth overtook last month's election euphoria. - REUTERS