April 9, 2018 / 6:34 AM / 4 months ago

Foreign selling of Asian equities persists in March as trade tensions heat up

(Reuters) - Foreigners continued to pull out money of Asian stock markets in March as trade tensions between the United States and China escalated and dampened the appeal for riskier assets.

People walk past an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, March 23, 2018. REUTERS/Toru Hanai

Overseas investors sold about $2 billion (£1.42 billion) worth of Asian stocks last month, following their sales of $9 billion in February, data from seven stock exchanges showed.

“The outflows represent a reaction to the increased volatility in global markets which we have seen over the past couple of months,” said Greg Mckenna, chief market strategist at AxiTrader.

Market uncertainty was mainly driven by U.S. President Donald Trump’s move to impose tariffs on imports from China and China’s threat to do the same on U.S. products.

At the end of last week, Trump directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports stoking further worries about a trade war.

For graphic on Asia foreign investments March 2018 click - reut.rs/2JamfPH

If the trade tensions persist, it will “both drag Asian equity markets lower and reintensify the outflows from the region,” Axitrader’s McKenna said.

Taiwan and Indonesia led the regional outflows in March, each seeing net sales of over $1 billion by foreigners.

Indonesian shares .JKSE fell over 6 percent last month, largely due to lesser-than-expected profit growth posted by some blue-chip companies such as PT Telekomunikasi Indonesia (Telkom) (TLKM.JK) and PT HM Sampoerna (HMSP.JK) for the full-year 2017.

Also, the government’s capping of domestic coal prices undermined market sentiment as the rule is expected to affect miners’ profits.

Philippine equities saw an outflow of $370 million on concerns over its high inflation and current account deficits.

Philippine’s consumer price index rose 4.3 percent in March from a year earlier, exceeding the central bank’s 2-4 percent target range for 2018 and 2019.

For graphic on IPO proceeds in India click - reut.rs/2GEUfGo

South Korea and Thailand markets saw outflows of $450 million and $358 million, respectively.

On the other hand, Indian markets witnessed inflows of over $1 billion helped by higher stock listings in March.

Thomson Reuters data showed 31 Indian companies got listed, raising $2.3 billion in March - the highest amount since November.

Also, a surprise cut in the government’s borrowing programme for the next fiscal year lifted Indian stocks in the last month.

Reporting By Patturaja Murugaboopathy; Editing by Kim Coghill

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