Asian Stocks Are Luring the Biggest Foreign Flows Since 2013

(Bloomberg) -- Foreign investors are piling money into major Asian equity markets outside of China at the fastest pace in seven years this quarter, as vaccine successes add to the global risk-on mood.

Nine regional stock markets have lured a combined about $48 billion since Oct. 1, the most since the fourth quarter of 2013, according to data compiled by Bloomberg. Japan is leading the way with $27.4 billion, followed by India at $9.2 billion. South Korea has received $6.4 billion.

*Markets included: Japan, India, South Korea, Taiwan, Thailand, Indonesia, Malaysia, Philippines and Vietnam

A series of encouraging results from vaccine makers have lent fresh impetus to the Asian equity rally spurred by Joe Biden’s victory in the U.S. presidential election and the signing of a regional trade pact. Benchmark stock indexes in India and South Korea hit all-time highs this month, while in Japan the Nikkei 225 Stock Average has surged to a 29-year peak amid a rotation into cheap cyclical shares.

“A catch-up rally may continue as investors reshuffle their portfolio in favor of cyclical sectors, which are perceived to benefit most from recent vaccine breakthroughs,” said Margaret Yang, a strategist at DailyFX. “A relatively well-handled pandemic situation across Asia-Pacific may have also boosted investment confidence in the region.”

Meanwhile, Asian shares’ better overall performance this month -- including Chinese stocks -- has helped the region overtake the U.S. in terms of year-to-date gains. The MSCI Asia Pacific Index is now up 12% in 2020, versus an advance of close to 11% for the S&P 500 Index.

The inflows also show that investors are positioning for an earnings recovery, according to Kieran Calder, head of Asia equity research at Union Bancaire Privee Ubp SA.

©2020 Bloomberg L.P.