Emerging Markets in Asia (Ex-China) Experience $19.72B in Outflows by November
Emerging markets in Asia, excluding China, have seen a sharp shift in investment flows this year. By November 2025, foreign investors pulled a total of $19.72 billion out of these markets. This data comes from Bank of America’s flow tracking reports and highlights a big change in where global money is going.
This trend is unusual because many of these economies have been growth engines for global investors in the past decade. The pullback shows that investors are now cautious. They worry about weak stock performance in key markets like Taiwan and South Korea.
At the same time, some countries like India and Southeast Asian nations are attracting attention for future opportunities. This shift in money movement could change how global funds view the region in 2026 and beyond.
What the Asian Market Data Shows: Outflows by the Numbers
Emerging markets in Asia excluding China saw a net outflow of $19.72 billion through November 2025, according to Bank of America flow data. This means more money left these markets than entered them through foreign investment by the end of November 2025.
This figure follows a weak first quarter for capital inflows, recorded as the poorest start since tracking began over nine years ago, followed by a short rebound before declining again later in the year.
The breakdown of the flows shows a clear divide. Equity markets in the region experienced heavy selling, especially in Taiwan and South Korea, while debt markets maintained positive inflows, totaling over $14.8 billion by November 2025.
Most countries in the region saw equity outflows, with India, the Philippines, and Indonesia being notable exceptions where some investment remained or grew.
Drivers of Outflows: What’s Behind the Pullback?
Equity Market Weakness
Foreign investors sharply reduced holdings in stocks across Asia outside China, especially in markets tied to technology and export growth. In November 2025, many Asian markets recorded their biggest monthly foreign outflows in nearly six years, driven by concern over high valuations in tech shares and profit growth fears.
Taiwan and South Korea were especially affected. Taiwan saw more than $12 billion of net foreign selling in November alone, while South Korea recorded nearly $10 billion in outflows, highlighting investor unease about stretched stock valuations.
Risk Appetite and Macro Conditions
Global risk appetite has tightened amid slower growth expectations and geopolitical uncertainty. Investors shifted capital toward safer assets, including bonds and other fixed-income instruments, instead of equities that are linked to economic growth and corporate profits.
Debt markets in the emerging Asia region have been more resilient. Investors kept flowing into local bond markets, which offer more stability when equities face pressure. This pattern shows a flight to fixed income when equity risk rises.
Regional Breakdown: Winners and Losers
India
India’s markets were more resilient than some peers. Although India saw foreign portfolio outflows in 2025 overall, including about $18 billion during the year, domestic investors helped cushion the sell-off. Foreign selling was partly due to high valuations and tariff concerns abroad, but domestic institutional buying supported the market.
Taiwan and South Korea
Investor pullback was heavy in both Taiwan and South Korea. The selling pressure was driven by fears of overvaluation, especially in technology sectors that had led markets in prior years. These markets registered some of the largest monthly foreign outflows since early 2020.
Southeast Asia
Indonesia, the Philippines, and other Southeast Asian markets bucked the regional trend with some continued foreign interest. While overall outflows dominated the region, these countries showed relative strength, indicating selective investor confidence.
Emerging Markets: Why Debt Still Attracts Capital?
Despite weak equity flows, debt markets in EM Asia (ex-China) continued to attract funds in 2025. Bonds are seen as safer assets when economic growth slows, and investors still seek income through fixed return instruments.
These inflows partly reflect expectations that central banks in major economies may ease monetary policy, lowering interest rates and making emerging market debt more attractive by comparison. This trend helps offset some of the pressure seen in equities.
Broader Market Signals: What Investors are Reading?
Data from October 2025 showed a temporary rebound in emerging market flows, with foreign capital entering stocks and debt globally, and equities outside China attracting the strongest inflows since late 2023.
However, uneven patterns remain. While some inflows return, heavy outflows in certain Asian equity markets suggest that investor sentiment is still fragile. This points to a cautious approach, with some funds rotating capital back into risk assets but doing so selectively.
The 2026 Turnaround Case: Is Recovery Ahead?
Economists and market analysts have suggested that emerging markets may see a net return of capital flows in 2026, after three years of weakness. A recent report highlighted expectations of renewed interest in EM assets as global financial conditions shift.
Improving earnings, stabilizing valuations, and gradual interest rate adjustments could help markets recover. Still, trends will vary widely by country, and the pace of recovery remains uncertain.
Implications for Investors
Investors now face a complex landscape in emerging Asia (excluding China). The broad sell-off in equities shows that risk appetite is cautious and that fixed income remains a preferred destination for capital.
Diversification across bonds and selective equity exposure may help manage volatility. Monitoring macro trends, policy shifts, and regional differences will be key in adjusting portfolios for 2026.
Closing: Rethinking EM Asia’s Role in Global Portfolios
The $19.72 billion outflow through November 2025 highlights a shift in how global investors view emerging markets in Asia outside China. Equities have borne the brunt of selling, while debt holds up better amid uncertainty.
Future flows will depend on global growth prospects, monetary policy, and market confidence. Selective recovery is possible, but the landscape may remain uneven. Adaptation and careful analysis will be vital for investors navigating these changes into 2026.
Frequently Asked Questions (FAQs)
Money is leaving due to weak stock returns, high tech valuations, and global risk fears. By November 2025, investors preferred safer assets like bonds over equities.
Taiwan and South Korea saw the largest outflows in 2025. Heavy selling hit technology stocks as investors reacted to high prices and slower global demand.
Some analysts expect gradual recovery in 2026. Lower interest rates and cheaper valuations may attract investors, but flows will likely remain selective and uneven across countries.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
