By Patturaja Murugaboopathy and Gaurav Dogra
April 1 (Reuters) - Asian equities recorded their biggest
foreign outflow in at least 12 years in March, hit by the
coronavirus pandemic and its impact on businesses across the
region, with most factories shuttered to contain its spread.
Overseas investors sold a net $33.3 billion worth of
regional equities last month, the highest since at least January
2008, data from stock exchanges in India, Indonesia, the
Philippines, South Korea, Taiwan, Thailand and Vietnam showed.
A shortage of dollars as many institutional investors
scrambled to safer currencies to hedge against volatility also
hit flows into emerging Asian equities, analysts said.
"We have seen fund flows coming out of EM, both from bonds
and equity. Majority of this is a flight to safety as the
COVID-19 cases have rebounded from developed markets into Asia
specifically," said Paul Sandhu, head of multi-assets quant
solutions at BNP Paribas Asset Management in Hong Kong.
"However,this won't last as we believe funds will return to
Asia equities, in particular, as more is known on the extent of
the COVID-19 impact in the U.S."
Taiwan and South Korean equities led the region, with
outflows of more than $10 billion each in the last month.
South Korea's March exports slipped 0.2% from a year
earlier, data showed on Wednesday, as the coronavirus affected
factory production and supply chains. South Korea's nationwide
infections are just below 10,000, making it the largest outbreak
in Asia outside China. Indian markets saw an outflow of about $8.3 billion, with
its equity markets pulled down by a 21-day nationwide lockdown,
which has raised fears of a devastating impact on an
already-slowing economy.
Indonesia, and Vietnam also had outflows of about $400
million each in the last month.
In the first quarter, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAP00000PUS plunged about 20%,
registering the biggest quarterly decline since September 2008.
The index fell 12% in March, the biggest monthly decline
since October 2008.
Rajat Agarwal, strategist at Societe Generale, said the
sharp decline in the market has started to price in a much lower
earnings growth than the current consensus expectation.
"We don't expect a V-shape recovery in earnings at the Asia
level like that in 2008-09. The Asian markets will continue to
have very diverging trends in earnings this year," he said.
"We recommend to focus on markets and sectors with earnings
visibility like Taiwan and Asia Technology sector,
respectively."
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Foreign investments in Asian equities https://reut.rs/2R2jcP4
Combined foreign investments in Asian equities https://reut.rs/2JrLMVO
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