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Asian Equity Markets Face Massive Outflows Amid Trade Concerns in November

Asian equity markets faced $15.88 billion in outflows during November as trade tensions rise. Discover the market’s outlook for 2025.

Asian Equity Markets Witness Heavy Outflows

Asian equity markets experienced significant foreign outflows for the second straight month in November, driven by rising trade tensions and concerns over potential tariff hikes under the incoming Trump administration. Investors' fears of supply chain disruptions added to the region's challenges, resulting in substantial withdrawals of foreign funds.

Foreign investors pulled $15.88 billion out of stock markets in Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines during November, according to LSEG data. This marked the most substantial monthly outflows since June 2022 and followed $15.38 billion in October.

Trade Uncertainty Hits Asian Equity Markets

The possibility of protectionist trade policies under President-elect Donald Trump significantly impacted investor sentiment in Asian equity markets. Proposed tariffs on major trading partners, including China, raised alarms about future economic stability.

"Trump 2.0 has reignited fears of trade disruptions," noted Yeap Jun Rong, a market strategist at IG. "Protectionist measures could severely impact the performance of export-reliant nations."

Such uncertainties have made investors cautious about stock markets in the region, which heavily depend on international trade to sustain growth.

Foreign Outflows Across Asian Equity Markets

The November withdrawals were widespread, affecting numerous markets across the region:

• Taiwan: Faced the largest foreign outflows, with $8.41 billion withdrawn—the highest since April 2022.

• South Korea: Recorded $3.21 billion in net losses, marking a fourth consecutive month of outflows.

• India: Investors sold $2.56 billion in equities following $11.2 billion in October.

• Indonesia: Saw $1.06 billion in foreign fund withdrawals.

• Vietnam: Experienced outflows amounting to $461 million.

• Thailand: Faced $395 million in net sales by foreign investors.

This extensive withdrawal underscores the widespread impact of geopolitical and economic uncertainties across Asian equity markets.

Challenges Facing Asian Equity Markets

Several factors contributed to continued foreign outflows from the region’s financial markets:

41. Trade Policy Concerns: Potential tariff increases under Trump’s administration have created uncertainty.

42. Rising Dollar Strength: The dollar index surged to 108.09 after Trump’s victory, its highest level since November 2022, making emerging market investments less appealing.

43. Bond Yield Pressures: Rising bond yields in developed economies diverted capital away from Asian equity markets.

44. China’s Stimulus Delays: The delay in China’s anticipated economic stimulus measures added to investor concerns.

45. Monetary Tightening Globally: Central banks’ reduced monetary support has further pressured markets.

Nomura analyst Chetan Seth predicts these challenges will persist into 2025, creating a difficult environment for Asian equity markets.

Positive Factors Could Help Asian Equity Markets Recover

Despite current setbacks, some analysts see potential for recovery in the medium term, citing key drivers for optimism:

57. Rate Cuts by Major Economies: Expected rate reductions by the U.S. Federal Reserve and European Central Bank could enhance liquidity and attract foreign investments.

58. Attractive Valuations: Many markets in Asia are trading at reasonable valuations, which could draw in value investors.

59. Corporate Earnings Rebound: A recovery in earnings could improve investor sentiment.

60. Resilient Emerging Market Assets: Broader emerging markets have shown resilience, which could encourage renewed interest in Asian equity markets.

"While risks remain, favorable conditions like rate cuts and stable valuations could draw foreign capital back to Asian equity markets," said Minyue Liu, senior investment specialist at BNP Paribas Asset Management.

Key Insights for Asian Equity Markets

69. Record Withdrawals: November's $15.88 billion in net outflows marks the largest since 2022.

70. Trade Tensions Remain a Concern: Tariff threats under the Trump administration weigh heavily on the outlook for Asian equity markets.

71. Regional Variance: Taiwan and South Korea experienced the most significant withdrawals.

72. Positive Signs on the Horizon: Rate cuts and earnings recovery could support a market rebound.

Conclusion

Asian equity markets are grappling with heightened risks stemming from trade tensions, monetary policy tightening, and a strong dollar. The significant outflows in November underscore the challenges the region faces. However, with supportive global monetary conditions, resilient emerging market assets, and stable valuations, there is hope fo