Asian Stocks Under Pressure Amid Concerns Over Trump Administration Policies

By Gaurav Dogra
(Reuters) – Asian stocks faced selling pressure from foreign investors for a second month in November due to fears of potential U.S. tariff hikes under the incoming Donald Trump administration.

Foreign investors withdrew a net $15.88 billion from equity markets in Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines, following a net withdrawal of $15.38 billion in the previous month, marking the largest monthly net selling since June 2022.

> "What we have seen in November is a reaction to Trump 2.0, where there are concerns that U.S. President-elect Donald Trump’s protectionist stance could mean a follow-through of his tariff threats, which may negatively impact Asian export-driven economies," said Yeap Jun Rong, market strategist at IG.

Last month, Trump indicated significant tariffs on the United States' three largest trading partners, including China. This could heavily impact regional exports that rely on strong supply chains with China.

Chetan Seth, an analyst at Nomura, expressed a bleak outlook for Asian stocks into 2025, attributing pessimism to impending tariffs, trade tensions, a potentially stronger USD, rising bond yields, and tightening monetary policies, exacerbated by China's delay in implementing anticipated stimulus measures.

Taiwanese stocks saw a net foreign outflow of $8.41 billion in November, the largest since April 2022. South Korea lost $3.21 billion in foreign capital, marking the fourth consecutive month of outflows.

A surge in the dollar after Trump's election victory on November 5 contributed to dampened investor sentiment, with the dollar index hitting 108.09, its highest level since November 11, 2022.

Foreign investors net sold Indian stocks worth $2.56 billion after around $11.2 billion in October. Indonesian, Vietnamese, and Thai stocks experienced foreign outflows of $1.06 billion, $461 million, and $395 million, respectively.

> "Looking ahead, risk remains with tail scenarios where trade disruptions spill over more broadly," remarked Minyue Liu, a senior investment specialist at BNP Paribas Asset Management.

> "However, positive factors such as the US Fed’s and ECB’s rate cut, earnings recovery, and resilient performance across EM assets, plus reasonable valuation, should help attract some foreign flows into Asia ex-Japan and the broader Emerging Market universe."