Published September 19, 2008

US investors dumped Asian stocks before current crisis

In S'pore, they let go of net US$897m of shares in Q2

By CHUANG PECK MING
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AMERICAN investors were winding down their Asian stock holdings - including Singapore stocks - and going easy on picking up shares globally before the latest financial shocks at home hit their portfolios.

Fears of inflation fanned by surging oil prices, plus anxiety about a global economic slowdown, led US investors to dump a net US$5.7 billion of Asian equities in the April-June second quarter, up from US$3.5 billion in Q1, according to the latest US Treasury figures.

In Singapore, US investors let go of a net US$897 million of shares as average trading volume on the Singapore Exchange slumped to 1.5 billion units - 13 per cent down from Q1 and more than 50 per cent from less than a year earlier.

The Straits Times Index was off another 8.37 points at end-June, taking its first-half loss to 15 per cent.

US investors continued to head for the exit here after selling a net US$960 million in Q1, a sharp reversal from the previous quarter when they snapped up US$2.02 billion of stocks.

US net sales of Singapore shares in Q2 were the third-largest by US investors in the region, after Japan and South Korea.

US investors sold a net US$2.48 billion of shares in Japan, down from US$3.09 billion in Q1.

They disposed of a net US$1.03 billion of Korean stocks in Q2, after buying US$1.85 billion in the preceding quarter. Beyond China, Hong Kong and Taiwan, US investors were net sellers in all other Asian stock markets in Q2.

In China, they picked up a net US$124 million of shares, up from zero in Q1.

In Hong Kong, they bought a net US$94 million of equities, overturning their position in Q1 when they got rid of US$2.42 billion.

In Taiwan, they cut back purchases to a net US$11 million, from US$70 million in Q1.

That's also what they did with their overall global investments too - slowing the accumulation of stocks to a net US$16.78 billion in Q2, from US$23.71 billion in Q1.

The MSCI world equity index fell 11.7 per cent in H1 - its worst half-time run since a 13.8 per cent slide in H1 1982.

US purchases of European stocks - the single-biggest US shareholdings - were a net US$10.22 billion, down from a net US$13.46 billion in Q2, as the FTSE Eurofirst sank 21 per cent in six months to June - the worst first-half showing since the index was configured in 1986.