In an unexpected turn for Asian debt markets, foreign investors withdrew substantial funds in November, marking the first instance of outflows in the past seven months. According to a report by Reuters, the anticipation of policy changes under the imminent Trump administration, coupled with a surging U.S. dollar, contributed to diminished investor interest.

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Data gathered from various regulatory authorities and bond market associations indicated a net withdrawal of $1.92 billion from bond markets across Indonesia, Thailand, Malaysia, India, and South Korea. This represents the first monthly net sales since April, reflecting growing investor apprehensions regarding potential trade restrictions.

Khoon Goh, the head of Asia research at ANZ, commented, “Markets started to price in the implications of an incoming Trump administration for Asia, as well as the outlook for U.S. rates.” This sentiment underlines the cautious approach adopted by investors in response to potential shifts in trade dynamics.

Indonesia witnessed foreign investors pulling out approximately $1.8 billion from its bond market, breaking a strong six-month buying trend. Similarly, the Thai and Malaysian bond markets experienced foreign outflows totaling about $1.08 billion and $257 million, respectively, marking a consecutive monthly decline.

Conversely, South Korean bonds attracted $1.07 billion in foreign inflows, continuing a five-month streak of net purchases influenced by their forthcoming inclusion in the FTSE Russell’s World Government Bond Index (WGBI) starting November 2025. Meanwhile, India’s debt market saw a modest net inflow of $145 million, indicating cautious investor engagement during this period of fiscal uncertainty.

The strengthening U.S. dollar has also played a significant role, achieving two-year highs post-election and leading to a depreciation of Asian currencies like the Malaysian ringgit, Thai baht, and South Korean won, each losing nearly 1.5% against the dollar. This currency fluctuation further contributed to the shift in investment preferences, as regional bonds faced reduced demand from foreign entities.

Source: IndexBox Market Intelligence Platform  

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