■ Fifth episode of foreign investor capitulation. We define foreign investor capitulation as foreigners becoming net sellers on a rolling 12- months basis. Figure 2 highlights net foreign selling of 0.4% of market cap in Emerging Asia ex-China ex-Malaysia. The other four episodes were in 2003 (SARs), 2008 (GFC), 2011 (European Financial crisis) and 2015/ 2016 (Yuan devaluation). While an escalation of the trade war could lead to deterioration in fundamentals, Figure 4 highlights a small 0.2% upgrade to 2018E consensus EPS for the region. This upgrade comes after two consecutive months of downgrades.
■ Even Southbound is associated with net selling. While YTD Southbound is still associated with net foreign buying of US$12.5 bn, Southbound has been associated with net selling of US$2.7 bn over the past three months.
Source : Credit Suisse Asia Pacific Equity Research
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