Portfolio sell-offs in EM Asia as trade tensions grow

July 9, 2018

SINGAPORE - Escalating trade tensions between the US and China have led to further selling by foreign portfolio investors in emerging Asia markets, with equity outflows broad-based for the second straight month.

ANZ Bank says South Korean bonds benefitted from safe haven demand, while aggressive rate hikes from Bank Indonesia could not stop the bond outflows. Foreign demand for China bonds picked up despite trade tensions.

“There are still no signs of a turnaround in flows over the early part of July,” ANZ says.

“With the US Federal Reserve set to tighten further and trade fears remaining in the background, foreign investors are likely to remain cautious.”  www.live.anz.com (ATI).