By Gaurav Dogra
(Reuters) – Foreign investors pulled heavily out of Asian stocks in January, deterred by higher U.S. Treasury yields and rising concerns that regional exports could suffer under additional tariffs from President Donald Trump’s administration.
Foreigners divested stocks worth $12.5 billion, on a net basis, in India, Taiwan, South Korea, Thailand, Indonesia, Vietnam and the Philippines in January, their third monthly net sales in four months.
Prerna Garg, an equity strategist at HSBC Global Research, attributed the outflows to elevated U.S. bond yields and a stronger dollar, noting that looming geopolitical worries have also made investors more risk-averse.
She said this trend is particularly noticeable in India, where softer domestic growth, coupled with global macro factors, has deterred foreign investors.
Foreigners sold a net $9.04 billion worth of Indian stocks in January, their second-largest monthly net sales on record.
The U.S. dollar index hit a 26-month high of 110.17 last month, driven by a robust labor market and fuelled concerns about the Federal Reserve’s reluctance to cut rates this year. The U.S. Treasury 10-year yields also touched a 14-month high of 4.809% in January.
The U.S. implemented additional 10% tariffs on all Chinese imports this week, with Beijing retaliating by announcing levies on U.S. imports including oil, coal, gas, cars, and farm equipment, set to kick in on February 10.
Meanwhile, foreigners sold Taiwan and South Korean stocks worth a net $1.52 billion and $1 billion, respectively, last month.
“The outflows in Taiwan and Korea equities are mainly due to the popularity of DeepSeek as investors are re-assessing the growth trajectory of AI capex in light of low-cost open-sourced AI models,” said Jason Lui, head of APAC equity and derivatives strategy at BNP Paribas.
Foreigners also offloaded $335 million of Thai stocks, $266 million of Vietnamese stocks, Indonesian shares worth $229 million and $114 million in Philippine equities last month.
Yeap Jun Rong, a market strategist at trading platform IG, said market volatility and global trade uncertainty continue to persist in February, while the risks of further tit-for-tat retaliation between the U.S. and China remain high.
“This may continue to warrant a cautious outlook on Asian equities, which could still limit foreign inflows into the region for the time being.”
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sonia Cheema)
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