Market Overview

Asian equities face outflows in February due to rise in U.S. bond yields

Foreigners were net sellers of Asian equities for a second consecutive month in February, hit by a jump in U.S. Treasury yields, which prompted investors to book profits in regional equities. Overseas investors sold a net combined total of $3.5 billion in South Korean, Taiwanese, Philippine, Thai, Vietnamese, Indonesian, and Indian stocks last month, data from stock exchanges showed.

U.S. Treasury yields jumped last month on expectations of higher inflation due to a big stimulus package to revive the economy. U.S Treasury bonds are considered safer and hence their higher yields tend to dissuade global investors from putting money in risk assets such as Asian equities. The MSCI’s broadest index of Asia-Pacific shares gained about 1.4% in last month, its smallest gain in four months. The index was trading at a forward 12-month price-to-earnings ratio of 17.42 at the end of January, the highest since September 2009.

Among the regional markets, Taiwan and South Korea witnessed the biggest net sales, with outflows of $4.4 billion and $1.8 billion respectively. Philippine, Vietnam and Thailand also faced some outflows last month.

Asian equities face outflows in February due to rise in U.S. bond yields, Reuters, Mar 1

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