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Indian equities get foreign inflows in October defying Asia trend

By Reuters

  • 04 Nov 2020
Indian equities get foreign inflows in October defying Asia trend

Foreign investors turned net buyers of Indian equities as slowing COVID-19 cases boosted hopes of a faster economic recovery from pandemic lows, while other Asian equities faced outflows on caution ahead of the U.S. presidential election.

According to stock exchange data, Indian shares witnessed inflows worth $2.66 billion in October, after seeing an outflow of about $1 billion in the previous month.

On the other hand, South Korea, Taiwan, Philippines, Thailand, Indonesia and Vietamese equities faced a combined outflow of $2.3 billion, the data showed.

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Over the past month, India's benchmark Nifty index has risen about 4%, compared with MSCI Asia ex-Japan index's gain of 2.9%.

The expected increase in India's weight in the MSCI's global indexes also helped inflows into India last month, said Radhika Rao, economist at DBS Bank.

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Thai equities, which have shed 22.7% this year to mark the biggest fall among major world stock indexes, witnessed an outflow of $700 million in October on concerns over the ongoing anti-government protests.

Overall, investors were wary ahead of the U.S. presidential elections, as the prospect of no immediate winner in the race would adversely affect regional markets and risk sentiment

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"The base case scenario of a Democratic sweep, as indicated by opinion polls, would intuitively be positive for risk assets, one that goes hand-in-hand with further foreign inflows for Asia," said Jingyi Pan, a Singapore-based market strategist at financial services firm IG.

"That said, there exists risks given potentially prolonged indetermination of the results due to early voting and also a possibility of contest of the results."

U.S. President Donald Trump has repeatedly refused to commit to a peaceful transfer of power if the vote count indicates he has lost to Democratic challenger Joe Biden.

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Share markets veered higher in wild Asian trading on Wednesday as results from the U.S. presidential election proved far closer than polls had predicted, leaving the outcome deeply in doubt.

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