By Gaurav Dogra
Foreign investors poured billions into Asian equities in June, driven by optimism over potential rate cuts by the Federal Reserve amidst easing U.S. price pressures. Global AI-linked firms also boosted demand for tech and semiconductor exports from the region.
According to stock exchange data, foreign investors bought a net $7.16 billion worth of regional equities in countries like South Korea, India, Taiwan, Indonesia, Vietnam, Thailand, and the Philippines.
U.S. inflation remained stable in May, in line with expectations, indicating a disinflationary path as stated by Fed Chair Jerome Powell. Technology exporters like South Korea and Taiwan saw significant foreign purchases in their equity markets last month.
The MSCI Asia Pacific IT index surged nearly 10% in June, its best performance in seven months, propelled by the global tech rally. Indian markets also attracted substantial foreign funds, rebounding from a sell-off post-election.
Despite positive trends in some countries, stock markets in Thailand, Vietnam, the Philippines, and Indonesia faced net outflows in June.
"We remain optimistic about the outlook for Asian equities," said Minyue Liu, an investment specialist at BNP Paribas Asset Management. "Most regional central banks' rate-hiking cycles seem to be shifting, which bodes well for Asian equities."
Analysis:
Overall, the influx of foreign investment into Asian equities in June was driven by expectations of Fed rate cuts and the positive performance of tech-related firms in the region. Countries like South Korea, Taiwan, and India saw significant inflows, while others experienced outflows.
Investors should keep an eye on central bank policies and global economic trends to make informed decisions about their investments in Asian markets. The potential for continued growth in the tech sector and policy initiatives in countries like India could present attractive opportunities for investors looking to diversify their portfolios.