The $32 billion black hole sucking the life out of Asian stocks

Net foreign selling is back to crisis levels.

Asian stocks plunged beneath the weight of an intense bout of foreign selling in January, according to Credit Suisse. Foreign investors pulled out a staggering US$6.9 billion from emerging capital markets in the first three weeks of the year, marking the second biggest month of net foreign selling since the Global Financial Crisis of 2008-2009.

From August to December 2015, foreign investors have sold some $23.9 billion worth of stocks in emerging Asia excluding China and Malaysia. 

Credit Suisse noted that net foreign selling in emerging Asia stocks now stands at 0.5% of market cap.The report also showed that net foreign selling has only been bigger than the current episode in 2008 to 2009.

“Thailand, Indonesia, Malaysia have held up better as foreign investor capitulation occurred earlier.Apart from China concerns, we believe a key driver is that foreign investor capitulation occurred earlier with net foreign selling reaching 1.6%, 1.2% and 0.8% of market cap in Malaysia, Thailand and Indonesia, respectively, by 30 September 2015. Net foreign selling currently is 1.3% for Malaysia, 1.4% for Thailand and 0.9% for Indonesia,” said the report.