Trumped: FIIs abandon EMs

Foreign institutional investors have called it quits on Asian equities after US President Donald Trump's America First policy triggered global trade uncertainty.

- Harsha Jethmalani

A likely shift in world trade dynamics due to potential reciprocal tariffs could hurt the economic prospects of Asian economies. With a strengthening dollar, Asian equities are losing their appeal, prompting a sell-off by FIIs.

The US administration has enacted additional 10% tariffs on imports from China and 25% tariffs on steel and aluminum, and more such tariffs may be on the cards.

"Though most Asia-Pacific countries other than China will likely be spared significant direct US tariffs being implemented against them, there is a risk of second-order effects impacting economic growth," Oxford Economics said on 17 February. "Supply chain impacts will especially be felt in Vietnam where, for instance, intermediate electronics production accounts for one-third of Vietnamese exports to China."