Asian equities continued to receive interest from foreign investors for the third consecutive week. The rising optimism in the region could be due to China pressing on with its reopening. Based on the provisional aggregate data for the eight Asian exchanges that we track, investors classified as “foreign” net bought USD2.40b last week.
Only India and Malaysia recorded net foreign outflows, while the other six countries that MIDF tracks posted net foreign inflows.
Indonesia has finally recorded its first weekly net foreign inflow in seven weeks at USD41.9m. The bulk of the inflows was received at the end of the week after BI upped the benchmark rate by 25 basis points to 5.75% on Thursday. This was widely expected and BI has signalled that it might be ending its tightening cycle as the rate hike was said to be adequate to meet its inflation target.
Meanwhile, India has posted its fourth consecutive week of net foreign outflows to the tune of -USD21.1m. This was a significant improvement in comparison with the -USD1.12b net sold by the foreigners during the week ended January 13. Foreign investors have reversed their net selling trend from Tuesday onwards as the Indian stock market entered the last leg of its shorter trading cycle implementation called the T+1 settlement which will begin in January 27. The phased implementation was carried out throughout the past year and India is set to become the second country after China to make the switch from its current T+2 system. This shift will allow investors to receive their shares and money in their accounts a day after the trade ends. Despite the renewed optimism, the net foreign inflows recorded from Tuesday to Friday were inadequate to overturn the -USD459.2m net sold by the foreigners earlier in the week. Year-to-date, India is the worst-performing market among the eight Asian exchanges that the research house tracks with a total net foreign outflow of -USD1.85b.
Apart from India, Malaysia saw the largest net foreign outflow of -USD39.1m last week. Among the eight Asian exchanges that we monitor, Malaysia is the third worst-performing market after Indonesia and has recorded a total net foreign outflow of -USD33.3m year-to-date.
