Asian equities see largest monthly foreign inflow in 15 months

Asian equities attracted strong foreign inflows in May as concerns over an immediate economic hit from higher US tariffs eased, prompting a return by investors who had previously exited large and concentrated positions in the region.

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The inflows marked a sharp reversal after four consecutive months of net foreign selling.

According to data from LSEG, foreign investors bought approximately $10.65 billion worth of equities across India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines, registering their largest monthly net purchase since February 2024.

US President Donald Trump's announcement of reciprocal tariffs in early April stoked concerns over the impact on Asian exports, exporter margins, and regional supply chains, but a subsequent 90-day pause for most countries later in the month helped ease investor fears and revive interest in regional assets.

Goldman Sachs said it has revised its earnings growth forecast for MSCI Asia Pacific ex-Japan (MXAPJ) to 9 per cent for both 2025 and 2026, raising estimates by 2 and 1 percentage points, respectively, citing stronger macro growth in China and US-exposed markets.

The upgrade was also supported by $600 billion in Al-related investments from Saudi Arabia to US firms, which are expected to benefit Taiwan and Korea, though the impact may be partially offset by a weaker dollar, the brokerage said.