In May, Asian stock markets saw a sharp reversal of foreign selling, with investors buying assets across the region. Concerns about the immediate economic impact of higher U.S. tariffs had faded, prompting funds to return after four consecutive months of net selling.
Net Purchases Reach Highest Level Since Early 2024
According to London Stock Exchange data, foreign investors purchased approximately $10.65 billion worth of stocks in India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines. This marked the largest monthly net inflow since February 2024.
Suspension of Tariffs Restores Confidence
In early April, U.S. President Donald Trump announced reciprocal tariffs, raising worries about reduced Asian exports, lower exporter profits, and disruptions to regional supply chains. Later that month, most countries agreed to a 90-day suspension of those tariffs. The suspension eased investor fears and renewed interest in Asian equities.
Upgraded Earnings Forecasts Support Markets
Goldman Sachs raised its earnings growth projections for the MSCI Asia Pacific ex-Japan Index (MXAPJ) to 9% in both 2025 and 2026—up 2 percentage points and 1 percentage point, respectively. The bank cited stronger macroeconomic growth in China and the U.S. as key drivers. It also noted that Saudi Arabia’s $600 billion AI-related investment in U.S. firms could benefit technology-linked markets in Taiwan and South Korea, although a weaker dollar might temper these gains.
Country-Specific Inflows and Outflows
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Taiwan led inflows with $7.28 billion, the largest monthly net purchase since November 2023.
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India saw $2.34 billion in net foreign buying, its biggest monthly inflow since September 2024.
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South Korea received $885 million, while Indonesia and the Philippines recorded $338 million and $290 million, respectively.
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Thailand was the outlier, with net foreign selling of $491 million.
Regional Index Performance
Despite early-year volatility driven by U.S. trade policy fears, the MSCI Asia Pacific Index was up about 8.8% year to date by the end of May. This outpaced global benchmarks: the MSCI World Index (up 5.4%) and the S&P 500 (up 0.98%).
