Asian equities continued to witness foreign outflows for a fifth consecutive month in May, hit by concerns over monetary tightening measures by major central banks and supply chain disruptions due to strict lockdowns in China.

Overseas investors withdrew $3.69 billion out of Asian equities, data from stock exchanges in Taiwan, India, South Korea, the Philippines, Vietnam, Indonesia and Thailand showed. However, the outflows were the smallest in the last five months.

“With surging real rates and consequent recession fears, equities have been sold worldwide, and risky assets like EM Asia equities more so given the fears sorrounding Fed tightening and upcoming quantitative tightening continue to depress Asian currencies,” said Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas.

“Countries like Thailand, Indonesia and to some extent Vietnam are benefiting from a supply-chain rerouting as markets try to diversify away from dependence on China, both in the wake of trade tensions and Covid-related issues,” DailyFX strategist Ilya Spivak said.

Some analysts said regional equities are relatively more resilient this time, despite aggressive selling by foreigners, as their central banks possess strong foreign reserves and economies have better economic fundamentals.

Alex Loo, strategist at TD Securities, expects limited downside for further equity outflows this year.

“Asia equities gained after quantitative tightening in 2017, tracking the rise in US equities (S&P 500) which likely supported equity inflows in 2017.”

“FX reserves are also more sizeable now and should buffer any aggressive sell-off in FX if U.S.’ financial conditions overly tighten,” he added.