LIVE MARKETS-Foreign investors on sidelines in ASEAN equity rally - for now

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FOREIGN INVESTORS ON SIDELINES IN ASEAN EQUITY RALLY - FOR NOW

Southeast Asian stocks have had a decent couple of months, up around 8%. JPMorgan analysts see scope for this to continue, and even for foreign investors, so far largely on the sidelines, to get involved.

Net outflows from ASEAN are over $12 billion year to date - only Indonesia has seen recent sizable inflows - but that's not stopped domestic investors buying stocks on the back of central banks slashing interest rates, and as the tariff picture becomes a bit clearer.

JPM reckons they should continue and also say that macro conditions would be right for a reversal of foreign flows late this year and early next year.

They say the Federal Reserve resuming its easing cycle leading to downward pressure on the dollar, and abating global macro risks could both drive inflows into ASEAN.

One risk to that view is surging Chinese stocks, since JPM note historically investors have used ASEAN to fund China trades, however, they think this looks less likely given the year to date outflows.

Only popular sectors such as Indonesian banks and Vietnam could be at risk.

(Alun John)

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