By Patturaja Murugaboopathy and Gaurav Dogra
July 9 (Reuters) - Foreign investors turned net buyers of
Asian stocks in June as optimism ahead of a meeting between U.S.
President Donald Trump and his Chinese counterpart Xi Jinping,
along with expectations of U.S. interest rate cuts bolstered
sentiment.
Overseas investors purchased a net $4.2 billion worth of
equities in June, data from stock exchanges in South Korea,
Taiwan, India, Thailand, Philippines, Indonesia, and Vietnam
showed.
The leaders of the United States and China agreed late last
month to restart trade talks after Trump offered concessions
including no new tariffs and an easing of restrictions on tech
company Huawei in order to reduce tensions with Beijing.
A collapse in trade talks had prompted sharp foreign
outflows from Asian equities in May.
"The U.S.-China trade truce at the G20 meeting will likely
support further inflows over the weeks ahead but this will have
to be balanced against the impact of slowing growth and elevated
equity valuations in some countries (India, Indonesia)," noted
Mitul Kotecha, a senior emerging markets strategist at TD
Securities.
"On balance, we expect portfolio inflows to Asia to continue
to strengthen but to remain discriminatory."
In June, Thai equities attracted $1.5 billion worth of
foreign money as the country's political uncertainty ended after
General Prayuth Chan-ocha secured a needed majority in the
parliament. Sino-U.S. trade optimism helped Taiwan and South Korea to
secure higher inflows last month, as the two countries have
extensive ties with tech companies in China and are part of
their supply chains.
However, India received just $374 million worth of inflows,
the lowest in five months, as concerns over sluggish consumption
and slowing growth overtook last month's national election
euphoria. So far in July, foreign investors have sold a net $451
million in Indian equities. In its annual budget on Friday, the
government proposed to increase listed companies' minimum public
shareholding and raise the income tax surcharge on foreign
portfolio investors. June inflows into Asia was also helped by expectations that
the U.S. Federal Reserve would aggressively cut interest rates
soon to boost the economy.
However, a recent rebound in U.S. job growth has reduced the
likelihood the Fed will slash rates at its next meeting later
this month, pressuring equity markets globally.
“The Trump-Xi meeting did indeed result in another trade
truce, and both sides have restarted trade talks. But a deal
could still be some time away, and is far from a guarantee,”
noted Khoon Goh, head of Asia research at ANZ Research.
“A rate cut at the next FOMC meeting at the end of July is
also far from a done deal given the still strong state of the US
labour market.”
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Foreign investments in Asian equities https://tmsnrt.rs/2YHgwIi
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