By Gaurav Dogra

(Reuters) – Asian equities saw money flows in November. Demand for semiconductor products in Asia fueled foreign purchases in South Korea and Taiwanese markets. However, concerns about recovery due to the Omicron variant slowed regional inflows.

    Cross-border investors last month purchased equities worth a net $2.04 billion in South Korea, Taiwan, the Philippines, Vietnam, Indonesia and India, compared with net selling of $6.05 billion in October, data from regional stock exchanges showed.

Foreign investments in Asian equities https://fingfx.thomsonreuters.com/gfx/mkt/movanqjbrpa/Foreign%20investments%20in%20Asian%20equities.jpg

    South Korea and Taiwanese equities attracted inflows worth $3.04 billion and $676 million, respectively.

The post-pandemic recovery by major trading partners allowed South Korean exports to grow at the fastest rate in three months in November. Meanwhile, Taiwan’s exports reached a record high in October.

Inflows to Philippine equity also reached $5 million.

Jun Rong Yeap is a Singapore-based market strategist for IG. “The inflows towards South Korea or Taiwan might be supported by the rally of the broader semiconductor industries,” Jun Rong Yeap said.

After the Omicron variant of infections grew, uncertainties regarding global economic recovery momentum caused regional equity to face new challenges at the end last month.

Yeap explained that foreign outflows could be driven by risky moods in Asian equities. This is because the previous upside was built on positive developments regarding economic reopening.

Indian equity was sold by offshore investors for $790m last month. It marked the second consecutive month with outflows. For the fourth month in a row, Vietnamese equity saw outflows of $393 million.

Inflows to Indonesian and Thai equities were also reported at $300 million each and $204 millions, respectively.

“Inflation data continues its surprise to the upside placing more pressure on tapering.” We might also see renewed outflows of Asia,” stated Alicia Garcia Herrero (chief Asia Pacific economist, Natixis SA).

To address stagnant worker growth and other inflationary concerns, the U.S. Federal Reserve may accelerate the withdrawal of its bond-buying program and increase rates in mid-2022.