South and Southeast Asian stocks were among the few bright spots this year for global funds as reopenings from the pandemic and a revival in tourism boosted corporate profits. Inflation has also remained relatively benign in parts of the region and improved current account balances helped reduce the impact from a stronger dollar.
Indian stocks attracted nearly US$6 billion ($8.09 billion) from international investors this quarter, according to Bloomberg-compiled data. And while Indonesia posted outflows this month, net inflows still amounted to more than US$4.4 billion so far in 2022.
Even so, South and Southeast Asia may become less attractive going into 2023 as investors shift their focus to cheaper North Asian markets.
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“North Asia is expected to outperform on valuation, an improving currency and interest rate environment,” said Frank Benzimra, head of Asia equity strategy at Societe Generale SA. Investors are also positioning for a pick-up in the semiconductor industry’s revenues by the second or third quarter next year, he added.
