Foreign net monthly investments in Asian stocks hit their highest level in two years in November, as investors hoped that the U.S. Federal Reserve would slow down its rate hikes.
People also felt better because they thought China would gradually change its zero-COVID policy and open up its economy.
Stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia, and South Korea showed that foreigners bought stocks worth a total of $15.18 billion in November. This was the most since November 2020.
Foreign money flows into Asian stocks every month. https://fingfx.thomsonreuters.com/gfx/mkt/byvrljyrxve/Monthly% 20foreign% 20investment%20flows% 20Asian%20equities.jpg
The minutes from the most recent policy meeting of the Federal Reserve showed that most policymakers thought rate hikes needed to be slowed down to stop the economy from going down and keep the financial system stable.
Related: Stocks have declined the most in two weeks while the dollar has risen on positive U.S. data.
After being hurt by aggressive rate hikes by the Federal Reserve earlier this year, the MSCI Asia Pacific index jumped by 14.8% last month. This was its biggest monthly gain in about 24 years.
Last month, foreign investors put $6.06 billion into Taiwanese stocks, the most since 2008, while India and South Korea each got $4.43 billion and $3.04 billion, respectively.
At the same time, $822 million and $683 million were spent on Thai and Vietnamese stocks, respectively. Last month, foreign investors also bought a small amount in the Philippines and Indonesia.
Analysts are also optimistic about flows into emerging Asian markets because the dollar has dropped sharply in recent weeks.
This week, the dollar index hit its lowest level in more than 5 months because of bets that the Federal Reserve would slow down the rate of interest rate hikes after four 75-basis-point increases in a row.
Yeap Jun Rong, a market strategist at IG, said, “The US dollar index is stuck in a downward trend, which could continue to help foreign money flow into Asian stocks through the end of the year.”
