Foreign Outflows from Asian Debt Markets in November

(Reuters) – Asian debt markets experienced foreign outflows for the first time in seven months in November, driven by anticipated U.S. trade policy changes under the incoming Trump administration and a strengthening dollar, which hampered investor interest.

Non-native investors pulled a net $1.92 billion from local bond markets in Indonesia, Thailand, Malaysia, India, and South Korea, marking the first monthly net sales since April, according to data from regulatory authorities and bond market associations.

> "Markets started to price in the implications of an incoming Trump administration for Asia, as well as the outlook for U.S. rates," stated Khoon Goh, head of Asia research at ANZ.

> "The prospect of trade restrictions next year does not bode well for the outlook of portfolio flows for the region."

Following Donald Trump’s election victory on November 5, he promised to impose significant tariffs on the U.S.'s top trading partners, including China, which may affect exports that rely heavily on robust Chinese supply chains.

Foreign investors sold off approximately $1.8 billion in Indonesian bonds, ending a six-month buying trend. Thai and Malaysian bond markets also faced continuous foreign outflows for a second consecutive month, totaling about $1.08 billion and $257 million, respectively.

The dollar's rise to two-year highs post-Trump's victory further discouraged interest in regional bonds, leading to a nearly 1.5% decline in the value of the Malaysian ringgit, Thai baht, and South Korean won against the dollar.

Meanwhile, South Korean bonds attracted a net $1.07 billion from foreign investors, marking the fifth consecutive month of net purchases, mainly due to their future inclusion in the FTSE Russell's World Government Bond Index (WGBI) starting November 2025.

Foreign investors also contributed a modest net $145 million to Indian debt markets last month.