Global Funds Trickle Back Into Asian Stocks as China Reopens

(Bloomberg) -- Foreign investors are returning to emerging Asian equities after several weeks of outflows, as China reopens from Covid lockdowns and the dollar pulls back from a year-long rally.

Weekly inflows for Asian stock markets excluding Japan and China climbed to almost $2.7 billion last week, the most since February, according to data compiled by Bloomberg. Taiwan and South Korea saw the biggest inflows at around $1 billion each, paring combined outflows for the two tech-heavy markets for the year to under $40 billion. 

Tech-Heavy Stock Markets See $63 Billion of Outflows in Asia

“China's easing of restrictions has removed the clouds of uncertainty for the region, creating room for a further pickup in manufacturing activity,” Charu Chanana, a market strategist at Saxo Capital Markets, wrote in an email. 

The reopening of China's economy has sparked a swift turnaround in sentiment toward Asia, as activity returns to major cities like Shanghai and Beijing. Some market participants also expect the dollar to peak in the short term after a slew of mixed US data -- which has been traditionally supportive of emerging-market stocks and currencies. 

Whether the flows can continue will depend on a sustainable reopening in China and the Federal Reserve slowing down its plans for rate hikes, wrote Chetan Seth, a strategist at Nomura in an email. 

“None of these scenarios are a given – at least where we stand currently,” he said. 

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