Asian Markets Surge as Investors Move Funds from US Equities

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Asia’s equity markets are surging as foreign investors, especially from the US, rotate capital through various industries in the region. The key factors driving the trend are the favorable foreign exchange scene for Asian markets compared to global markets and key earnings reports.

Currency momentum supports foreign inflows

Since the beginning of 2025, US President Donald Trump’s trade tariffs have spurred changes in the dynamics of the financial markets. Due to sentimental perceptions that the US market will likely record lower returns, investors have since redirected funds into Asian currencies like the Japanese yen and Chinese yuan, prompting a steady appreciation in the currencies in recent months. Forex trading data shows that the Chinese yuan strengthened approximately 2.4 percent since February, while the Singapore dollar and Indian rupee advanced 3.6 and 2.3 percent, respectively.

While Asian currencies have been recording gradual increases, the US dollar declined by 10 percent against major currencies, especially the euro, which dropped by 13 percent. These figures have historically motivated investors to switch focus from US markets to Asian equities, creating a tailwind event that continues to attract foreign investments.

Earnings upgrades accelerating rotation

While investors are making moves to move funds to where potential long-term gains are, given the uncertain economic scenes in the US market, consensus earnings estimates across key Asian markets have begun turning upward. Asian companies like CATL, specializing in EV batteries, and Tencent, one of Hong Kong’s tech giants, have reported higher earnings as money continues to flow into the region. CATL has recorded an over 8 percent increase in the past month and over 50 percent in the past 12 months, while Tencent is up 33 percent in the last 6 months.

Asia has attracted US$6.02 billion worth of foreign equity inflows in June for the second consecutive month across Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines. Although the June inflow is still short of the US$10.65 billion that came into the Asian markets in May, the sum still reflects the influx of foreign investors into the region.

How Asia and US equities compare in investment outlook

The drop in US dollar strength and softening US growth forecasts, alongside regional advances, have made Asia a top choice for several investors. At the beginning of the year, the MSCI Asia ex-Japan Index rose about 17 percent in dollar terms, compared with a 6 percent gain in the S&P 500. Emerging Asia’s markets are also outperforming Europe, primarily due to lower debt levels and declining bond yields recorded in recent times. Another major factor boosting the investing trend in Asian markets is the growth in high-value sectors such as technology and advanced manufacturing, which supply most of the world.

Although the Asian markets appear to maintain a leading streak against their US counterparts, the tailwinds responsible for the influx of money into the region can wane. Tariff tensions that posed a significant downside to the US markets have been renegotiated, diminishing the previous effects the tariffs had on US markets. Current data shows that the US markets are picking up the pace and gaining an upward momentum, and the US records a new customs revenue high for 2025. In addition to the growth expectations in Europe, a reversal in investor confidence in the US markets may be on the horizon.

In the meantime, consumer sentiment in China and other Asian countries is improving, and demand for goods in the region is steadily increasing. With the Chinese government launching various policy initiatives, including a trade-in program that offers subsidies to consumers who replace old appliances with more energy-efficient models, the consumption rate is likely to climb higher. At the same time, China is positioned to see an increase in international trade relations, keeping the current investment trend among Asian equities.

Additionally, even though the US markets appear to be resisting earlier predictions of a stall and are climbing steadily, recent moves by US President Donald Trump may make US stocks unattractive to investors looking for economic stability and more predictable growth. On the other hand, the growing isolationism of the US may forge stronger regional cooperation in Asia, resulting in more investments from different countries. But with the news of Trump’s upcoming plans to impose 30 percent duties on the European Union (EU) and Mexico from August 1, 2025, above the 20 percent initially proposed on the EU in April, investors may keep their bets on the Asian markets while anticipating the aftermath of the next phase of trade tariffs.

While Asia earnings are reading green as positive numbers pile up for the region’s equities, the US earnings season begins on August 22, 2025. Current predictions are that the S&P 500 profits are expected to rise 5.8 percent year-over-year, down from its April forecast of 10.2 percent growth, just before Trump launched his trade war. For now, investors are observing how tariffs and the US inflation data will affect the US markets and the next possible trends for the Asian markets.

Looking ahead

Asian markets continue to benefit from strong currency performance and positive earnings reports, making them attractive to foreign investors. The region has drawn billions in investment flows as traders seek alternatives to US markets amid trade tensions. However, the investment landscape remains fluid. US markets show signs of recovery, and upcoming earnings reports could shift investor sentiment. Trade policies and tariff decisions will likely be key in determining where global capital flows next. Investors should monitor regional earnings data and international trade developments as they plan their investment strategies for the remainder of 2025.