Asian debt markets witnessed foreign outflows in November for the first time in seven months as expectations of changes in U.S. trade policies under the forthcoming Trump administration and a strengthening dollar dampened investor appetite.
Non-native investors withdrew a net $1.92 billion from local bond markets in Indonesia, Thailand, Malaysia, India and South Korea, registering their first monthly net sales since April, data from regulatory authorities and bond market associations showed.
"Markets started to price in the implications of an incoming Trump administration for Asia, as well as the outlook for U.S. rates," said Khoon Goh, head of Asia research at ANZ.
"The prospect of trade restrictions next year does not bode well for the outlook of portfolio flows for the region."
Following his November 5 election victory, U.S. president-elect Donald Trump pledged to impose significant tariffs on America's top three trading partners, including China, potentially impacting exports reliant on strong Chinese supply chains.
Foreigners divested about $1.8 billion worth of Indonesian bonds, halting their six-month buying trend.
Thai and Malaysian bond markets witnessed foreign outflows for a second successive month, worth about $1.08 billion and $257 million, respectively, on a net basis.
The dollar's surge to two-year highs after Trump's victory last month dampened investor appetite for regional bonds, with the Malaysian ringgit, Thai baht, and South Korean won each losing nearly 1.5% against the dollar.
South Korean bonds, meanwhile, saw a net $1.07 billion worth of foreign inflows, the fifth monthly net purchase in a row, influenced by their upcoming inclusion in the FTSE Russell's World Government Bond Index (WGBI) starting November 2025.
Foreigners also added a meagre net $145 million to Indian debt markets last month.
Source: Reuters (Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Lincoln Feast)