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Emerging Asian equities ex-China saw massive foreign purchases in August due to a rise in risk appetite based on tempered inflation expectations.

Data from stock exchanges in South Korea, India, Taiwan, the Philippines, Vietnam, Indonesia and Thailand showed that foreigners had bought equities worth a net $7.54 billion, marking their biggest monthly net buying since December 2020.

Despite the net foreign purchasing of the past two months, regional equities have seen foreign outflows of more than $60 billion so far this year.

Driven by rising interest rates and consequently diminishing risk appetite, that has been the biggest outflow from the region since the global financial crisis in 2008.

But prices for commodities, especially crude oil , have fallen in recent weeks, easing worries over inflation and supporting views that central banks will go easy with interest rate rises for the rest of the year.

Indian equities lured $6.44 billion in foreign money in August, the largest monthly volume in 20 months, on hopes that Indian companies would deliver stronger earnings and that the fall in crude oil prices would help narrow the country’s current account deficit.

Flows into South Korean equities jumped to a nine-month high of $3.01 billion.

“The heavy-lifting for foreign inflows in August seems to revolve around India, where economic conditions seem to be holding up better,” said Yeap Jun Rong, a market strategist at IG.

Thai and Indonesian equities also gained foreign inflows – worth $1.6 billion and $510 million, respectively.

Meanwhile, Taiwanese equities saw foreign outflows of $3.9 billion, building on withdrawals of $608 million a month earlier due to a rise in tensions with China.

“For emerging Asia markets to see more sustainability in foreign inflows, we may need to see a moderation in the U.S. dollar, which continues to push to its highest levels,” said IG’s Yeap Jun Rong