Rising interest rates, particularly in the United States, were the main driver of capital outflows from Asian stock markets last year. Investors pulled about $57 billion out of here during 2022.
Outflow from stock markets
Such volume is the largest since the financial crisis erupted in 2008, Reuters reported. The largest outflows came from stock markets in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia and South Korea.
The main reason for the outflow was the massive interest rate hike by the US central bank. The Federal Reserve has raised its benchmark rate by 0.75 percentage point four times in the past year, the steepest increase in 40 years.
The situation in the Asian markets was also reflected in the US
This was immediately reflected in an increase in interest yields on US 10-year bonds, whose rate rose by 2.3 percentage points to 3.83 percent. Moreover, US government bonds are a much less risky asset than equities in the aforementioned Asian markets. Especially if we take into account the general decline of stock markets in the world. Taiwan saw the largest outflow of investment into equities, at over $41 billion.
