Jan 5 Reuters Asian equities attracted their biggest inflows in seven years in 2023, encouraged by major central banks39; deceleration in rate hikes to prioritize economic stimulation amid diminishing inflation worries.

Central banks only moderated the pace of their rate hikes last year, but this year analysts anticipate increased foreign inflows into regional equities as the potential for U.S. rate cuts enhance the appeal of risk assets.

According to stock exchange data from Taiwan, South Korea, India, Indonesia, the Philippines, Thailand and Vietnam, foreign investors bought a net 26.62 billion worth of stocks last year, the most since 2016.

Indian equities had the greatest inflows last year, attracting a net 20.74 billion in foreign purchases, the most since 2020. South Korean and Taiwan stocks received 10.12 billion and 3.45 billion in foreign inflows respectively.

Meanwhile, Indonesia, the Philippines, Vietnam and Thailand all saw net outflows. Foreign investors took the most money out of Thai equities at more than 5 billion.

In December, though, these same seven Asian stock markets attracted about 12.59 billion in net foreign investments, the most since November 2022.

The additional foreign inflow in December is largely a reflection of global investors anticipating a relatively aggressive Fed rate cut scenario for 2024, said Jason Lui, Asia Pacific Equity and Derivative Strategist at BNP Paribas.

For example, the latest Fed fund futures pricing suggests that…