Fed Caution Drives Foreign Outflows from Asian Equities Amid Diverging US Signals

In the holiday-shortened week ended January 2, 2025, global markets showed mixed performance as Federal Reserve caution over diverging US economic indicators took center stage. Thirteen of 20 major indices rose, led by South Korea’s KOSPI (+4.4%), Vietnam’s Ho Chi Minh VSE (+3.2%), and Taiwan’s TAIEX (+2.8%). In contrast, US benchmarks weakened, with Nasdaq falling 1.5%, S&P 500 down 1.0%, and Japan’s Nikkei 225 off 0.8%. Malaysia’s FBM KLCI dipped 0.4%.

Foreign Outflows

Foreign investors turned net sellers across eight monitored Asian markets, withdrawing USD1.05 billion, primarily from India, South Korea, Malaysia, and Thailand. On Bursa Malaysia, outflows widened 65% to RM904 million, marking a fourth straight week of selling. December closed with USD2.13 billion in regional net outflows.

The US dollar edged up 0.1% against the ringgit to RM4.0540. Brent crude rose marginally to USD60.75 per barrel, while crude palm oil fell 2.4% to RM3,991 per tonne.

Business News

Asir Fatagar

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