October 2018: the Biggest Asian Equities Sell off from Foreigners in 7 Years!


No wonder that October was one of the crucial months that investors had faced, except for the crisis that happened around every 10 years. A huge selloff from foreign investors was due to concerns over slow earnings, trade war, and high U.S. interest rate.

According to the data in October, foreigners sold a total of $14.54 billion (approx. ฿480 billion) in Taiwan, South Korea, India, Thailand, Philippines, Indonesia, and Vietnam equities. The number was considered the highest selloff in seven years.

Refinitiv data showed 54% of Asian companies have missed consensus earning forecasts for the third quarter so far, underscoring a lackluster earnings performance and worries about the impact from the trade war between the U.S. and China.

 

Still, investors hope that after the G20 meeting at the end of November, as scheduled, U.S. President Donald Trump and Chinese President Xi Jinping could find a common ground on their long dispute that causes nothing but loss to global markets.

 

However, there would be only a small window for investors for speculation as Fed probably launches another rate hike in December, which could be the beginning of another plunge when foreign investors will likely shift their investments to find more promising short-term profit than Asia markets. When the interest rate goes up, bonds will also have the tendency to increase as well.

SET has been clinging on the support level at 1,650 – 1,670 points in the middle of November, but there are no telling what will happen once the rate hike kick in. A lot of companies had missed their target earning in 3Q18, and the last quarter would be more or less the same as the problems still remain. We would find ourselves struggling in the first quarter of 2019 if this continues.

 

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