Trumped: FIIs abandon Asian equities, unnerved by potential US reciprocal tariffs, strengthening dollar
Subscribe to enjoy similar stories. Foreign institutional investors have called it quits on Asian equities after US President Donald Trump’s America First policy triggered global trade policy uncertainty. A likely shift in world trade dynamics due to potential reciprocal tariffs could hurt the economic prospects of Asian economies.
With a strengthening US dollar, Asian equities are losing their appeal, prompting a sell-off by FIIs. The new US administration has already enacted additional 10% tariffs on imports from China and 25% tariffs on steel and aluminium, and more such tariffs may be on the cards. “Though most Asia-Pacific countries other than China will likely be spared significant direct US tariffs being implemented against them, there is a risk of second-order effects impacting economic growth," Oxford Economics said in a report dated 17 February.
“Supply chain impacts will especially be felt in Vietnam where, for instance, intermediate electronics production accounts for one-third of Vietnamese exports to China." “While there is a threat to Indian equities from valuations, cheaper Chinese stocks and the potential impact from DeepSeek technology, India is structurally better placed than China," said Hitesh Jain, lead analyst at Yes Securities. While it is tough to gauge the actual impact at this stage, sentiment has turned downbeat. Indonesia, Malaysia, the Philippines, South Korea, Taiwan and Vietnam are bearing the brunt.
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