Foreign capital returns to Southeast Asia: In January, it attracted over 700 million USD, and ASEAN stock markets may see consecutive net inflows of foreign capital for the first time in nearly 16 months
Since January this year, the emerging market stock markets in Southeast Asia have received over $719 million in net foreign inflows, with an additional inflow of $291 million in December last year. Indonesia, Thailand, and Malaysia have become the main destinations for capital inflows, attracting foreign investment due to their lower valuations and economic potential. Analysts point out that this is driven by valuation advantages, improvements in the macro environment, and a reduction in global investors' reliance on the dollar
The Southeast Asian emerging market stock market is expected to see its first consecutive two months of net foreign inflows in nearly 16 months, indicating that the region is regaining investor attention after a prolonged period of capital outflow.
According to data compiled by Bloomberg, foreign investors have net invested USD 719 million in the region from January to date, while December of last year also recorded a net inflow of USD 291 million. If this trend continues, it will mark the first time since September 2024 that ASEAN emerging markets achieve two consecutive months of net capital inflow.
In terms of country distribution, Indonesia, Thailand, and Malaysia have attracted the largest shares of this round of capital inflow. Analysts believe that their relatively low valuation levels and economic growth potential are rekindling investors' interest in allocation.
Multiple Factors Supporting Capital Inflow
Mohit Mirpuri, Senior Partner at SGMC Capital Pte, pointed out:
"The return of foreign capital is a result of the combined effects of valuation attractiveness, improvements in macroeconomic stability, and a reduced reliance on the US dollar."
He stated that the current capital inflow exhibits a cautious reallocation characteristic, and this trend is expected to continue throughout the year. Investors are optimizing their portfolio structures by diversifying across different markets to reduce excessive reliance on a single market or currency.
This change in capital flow further indicates that, in the context of rising global uncertainty, emerging markets supported by domestic demand and with relatively controllable geopolitical risks are increasingly attracting international capital
