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Emerging Asia reels from $11-B outflow as dollar rides on Trump

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by November 23, 2016 General
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Posted on November 24, 2016

SINGAPORE/BANGKOK — Global funds sold about $11 billion of equities and bonds in Asia’s emerging markets after Donald J. Trump’s victory in the US presidential election as expectations for his economic policies sent Treasury yields higher and sparked the dollar’s strongest rally in eight years.

India suffered the biggest outflows between Nov. 9 and Nov. 18, followed by Thailand, according to calculations by Bloomberg using official data.

The capital flight trims the year-to-date inflow into India, Indonesia, the Philippines, South Korea, Taiwan and Thailand to around $55 billion.

In sum:

• India: Foreign investors have been net sellers of $1.5 billion in bonds and $1.4 billion in equities from Nov. 9 to 17;

• Thailand: Global funds were net sellers of 80.5 billion baht ($2.3 billion) in bonds and $534.3 million in stocks from Nov. 9 to 18;

• Indonesia: Overseas investors sold a net total of 13.9 trillion rupiah ($1 billion) in local debt from Nov. 9-16 and $444.2 million in equities from Nov. 9 to 18;

• South Korea: Global funds were net sellers of 30 million won ($25,500) in listed bonds in Nov. 9-17, and $949.1 million in Nov. 9-18;

• the Philippines: Investors were net sellers of $170.6 million in stocks in Nov. 9-18. No comparable data is available for bonds;

• Taiwan: Global funds were net sellers of $2.75 billion in stocks in Nov. 9-18. No comparable data is available for bonds;

OUTFLOWS TO PERSIST
“Fund outflows from emerging markets will probably continue for a while and then investors will see if Mr. Trump will carry out some policies he has mentioned before the election, such as fiscal stimulus and protectionist-type trade policies,” Masakatsu Fukaya, an emerging markets trader with Mizuho Bank Ltd., said in a phone interview.

“Many of his policies may lead to a stronger dollar and are negative on the emerging markets.”

Bloomberg’s dollar index climbed the most since 2008 in the two weeks just past amid speculation that President-elect Trump’s reflationary policies will trigger higher interest rates.

By contrast, South Korea’s won has dropped 3.4% since the US election, Indonesia’s rupiah has weakened 2.7% and the Philippine peso has fallen 2.5%.

Mr. Trump said in a video that he will issue notification of intent to withdraw from the Trans-Pacific Partnership trade deal on his first day in office.

He has pledged to spend $1 trillion to rebuild and improve the nation’s crumbling infrastructure. — Bloomberg

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