Asian equities witnessed money inflows in November as demand for regional semiconductor products boosted foreign buying in South Korean and Taiwanese markets, although concerns over recovery amid the spread of the Omicron variant capped regional inflows.
Cross-border investors last month purchased equities worth a net $2.04 billion in South Korea, Taiwan, the Philippines, Vietnam, Indonesia and India, compared with net selling of $6.05 billion in October, data from regional stock exchanges showed.
South Korea and Taiwanese equities attracted inflows worth $3.04 billion and $676 million, respectively.
South Korean exports in November grew at their fastest pace in three months due to a post-pandemic recovery in major trading partners, while Taiwan's exports climbed to a new high in October.
Philippine equities also saw marginal inflows of $5 million.
"The inflows into South Korea and Taiwan may be underpinned by the rally in the broader semiconductor industry," said Jun Rong Yeap, a Singapore-based market strategist at IG.
However, regional equities faced fresh headwinds by the end of last month after a rise in infections from the new Omicron variant raised uncertainties about global economic recovery momentum.
"Some risk-off mood may drive foreign outflows from Asian equities, considering that previous upside has been built upon positive developments on economic reopening in the region," Yeap said.
Offshore investors sold Indian equities worth $790 million last month, marking a second straight month of outflows. Vietnamese equities witnessed outflows for a fourth consecutive month, worth $393 million.
Thai and Indonesian equities also faced outflows of $300 million and $204 million, respectively.
"Inflation data continues to surprise on the upside putting more pressure on tapering. In that regard, we might see renewed outflows from Asia," said Alicia Garcia Herrero, chief Asia Pacific economist at investment firm Natixis SA.
The U.S. Federal Reserve is likely to accelerate the taper of its bond-buying programme and lift rates as soon as mid-2022 in order to address stalled workforce growth and inflationary risks.