Asian equities receive record inflows in November

Foreign net monthly inflows into Asian equity hit a two-year high in November due to hopes that the U.S. Federal Reserve could cut the pace of its interest rate hikes.

Expectations that China would loosen its zero-COVID policy and open up its economy lifted sentiment.

Foreigners bought equities worth net $15.18 billion in November, the most since November 2020, according to data from stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia and South Korea.

According to the minutes from the Federal Reserve's recent policy meeting, most policymakers saw the need for a slowdown in rate hikes to counter the economic downtrend and maintain financial stability.

The MSCI Asia Pacific index surged 14.8 per cent last month, its biggest monthly gain in nearly 24 years, after being hit by aggressive rate hikes by the Federal Reserve earlier this year.

Taiwanese equities received $6.06 billion in foreign inflows last month, the biggest amount since 2008, while India and South Korea received $4.43 billion and $3.04 billion, respectively.

Thai and Vietnamese equities had net purchases of $822 million and $683 million. Foreign investors had small net purchases in the Philippines and Indonesia last month.

As the dollar has dropped sharply in recent weeks, analysts are optimistic about flows into emerging Asian markets.

The dollar index was at a more than 5 month low this week, despite bets that the Federal Reserve would dial down the pace of its interest rate hikes after four consecutive 75 basis-point increases.

The US dollar index is locked in a downward bias, which could continue to provide a supportive environment for foreign investment into Asian equities towards the end of the year, said Yeap Jun Rong, market strategist at IG.