The MSCI Asia ex-Japan Index has fallen 20 percent as foreign investors took US$71 billion out of emerging Asian stock markets outside China so far this year, already double last year’s outflows. Tech-heavy Asian markets such as South Korea and Taiwan look particularly vulnerable as higher global bond yields and recessionary headwinds are hurting valuations and the demand outlook. Further currency weakness could threaten the resilience their stock markets have shown this year. “From a flows and sentiment perspective, yes Asian stocks tend to underperform in the short term against a rising dollar,” said Christina Woon, investment director for Asia equities at Abrdn PLC. “You can also find a number of beneficiaries, such as exporters, or companies that have more domestically focused tailwinds where a stronger dollar is less of an issue,” she added.
