Asian stocks attract foreign inflows for second month, but tariff outlook clouds
(Reuters) -Asian stocks drew foreign inflows for a second straight month in June, buoyed by investors wagering on U.S. Federal Reserve interest rate cuts and a softer U.S. dollar, though gains were capped by jitters over looming U.S. tariffs.
Foreign investors bought a net $6.02 billion worth of equities across Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines in June, down from $10.65 billion in the previous month, according to LSEG data.
The MSCI Asia ex-Japan Index rose 5.33% last month, its strongest monthly gain since September 2024, outperforming the MSCI World Index, which advanced 4.36%.
Upbeat demand for artificial intelligence-linked products, underscored by record highs in chip-maker Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) last month, spurred strong foreign inflows into Asia’s technology sector, with Taiwan and South Korea - the region’s dominant tech exporters - attracting net purchases of $3.22 billion and $2.01 billion, respectively.
Foreign investors also added a net $1.69 billion worth of Indian stocks in a third straight month of net purchases.
Indonesian, Thai, Vietnamese and Philippines stocks, meanwhile, saw net outflows of $515 million, $243 million, $73 million and $72 million, respectively in the last month.
However, analysts remained cautious about the regional outlook, which hinges largely on tariff policy decisions by U.S. President Donald Trump.
Earlier this week, Trump postponed his tariff deadline to August 1 from the previous July 9 to allow time for negotiations, but simultaneously escalated trade tensions by announcing new duty rates for several countries, including major trading partners Japan and South Korea, and imposing a 50% tariff on copper.
While tariff uncertainty now extends to August, the growth impact may be less severe than feared, Goldman Sachs said on Friday, and that final announcements could act as a risk-positive "clearing event" despite higher-than-expected rates.
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