J.P. Morgan See INR, IDR & PHP Vulnerable To Further Equity Outflows

JPM notes... "Outflows expected to continue. After strong inflows in January, foreigners resumed withdrawals from non-China equities to the tune of $3.1bn in March. With our economists anticipating an end to global expansion by 2024 and for the benefits of China’s reopening to fade in 2H23, foreign equity flows are likely biased towards outflows. We have noted previously that we find equity flows to be a notable driver of price action in Asia FX.

"INR, IDR, PHP exposed to outflows. We refresh the Outflow Risk Score, our assessment of the risks of equity outflows across countries. This risk is quantified based on valuations, positioning, sensitivity to global macro conditions, and our in-house stance for each country. On sensitivity to global macro, we now also consider the sensitivity of equity flows to conditions in the credit market, given our finding that non-China Asia flows are highly sensitive to credit markets stress. We find that INR, IDR and PHP have the highest scores in out Outflow Risk Score, indicating that they are exposed to continued foreign outflows. We are bearish PHP, and neutral IDR."