Global de-risking pushes cash holdings to highest in more than two decades
Since the peak in January last year, foreign investors have pulled US$111 billion from Asia excluding China, surpassing the US$93 billion during the global financial crisis in 2008
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FOREIGN institutional investors have been pulling their money out of equities, pushing cash allocations to their highest in more than two decades, as fears of a global recession intensifies. Strategists warn that any market rebound is likely to be short-lived and an opportunity to trim risk exposure.
Sunil Koul, Asia-Pacific equity strategist at Goldman Sachs, told The Business Times that markets are likely to remain challenging over the next three months and regional flows will stay weak as well in the near term.
“It has been a broad-based risk-off as macro headwinds from higher rates, slowing growth and a stronger dollar have intensified in September, prompting outflows, notably across emerging markets (EM),” Koul said. For the year to date, the US dollar index, which tracks the greenback against a basket of major world currencies, has surged almost 20 per cent to a 20-year high.
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