Foreign investors pull $50 billion from Asian stocks amid war driven volatility
Foreign investors have withdrawn approximately 50 billion dollars from Asian equity markets in March, marking one of the largest capital outflows since the 2008 financial crisis as geopolitical tensions tied to the Iran conflict continue to disrupt global markets.
Data from LSEG shows sustained net selling across major Asian markets, including South Korea, Taiwan, India, and several Southeast Asian economies. The scale of the outflows places 2026 on track for the most significant monthly capital flight in the region in nearly two decades.
The exodus comes as oil prices surge above 100 dollars per barrel following disruptions linked to the conflict. Brent crude has experienced sharp swings, falling nearly 11 percent in a single session after comments from US President Donald Trump suggesting possible diplomatic progress, before rebounding as Iran denied any ongoing negotiations.
Goldman Sachs has raised its oil price forecasts, projecting Brent to average around 110 dollars per barrel in March and April. The bank also warned that prolonged disruption to flows through the Strait of Hormuz could push prices toward or beyond the record levels seen in 2008.
The strategic waterway, which normally carries around 20 percent of global seaborne oil, has been largely closed to commercial traffic since late February. The International Energy Agency has described the disruption as the most severe supply shock in the history of the oil market and coordinated the release of 400 million barrels from strategic reserves to ease the impact.
Asian economies have been particularly vulnerable due to their reliance on Middle Eastern energy supplies. Japan depends on the region for roughly 90 percent of its oil imports, while South Korea relies on it for about 70 percent. The spike in energy costs has heightened inflation risks and weakened investor sentiment across the region.
India has seen continuous foreign selling throughout March, with outflows of around 9.6 billion dollars from equities alone. South Korea’s Kospi index recorded one of its steepest single day declines earlier in the month, reflecting broader regional stress.
The current trend reverses a recent investment strategy that favored Asian markets over US equities. Investors are now reassessing risk exposure as rising oil prices and geopolitical uncertainty strengthen the US dollar and increase inflation concerns.
Market participants remain cautious about the outlook. While the United States has extended its deadline for Iran to reopen the Strait of Hormuz, uncertainty persists over whether diplomatic efforts will succeed.
Corporate leaders have warned that the economic effects may not yet be fully reflected in market prices. Industry executives suggest that oil prices could climb significantly higher if disruptions continue, reinforcing volatility across financial markets.
The scale and speed of capital outflows underscore the sensitivity of global investment flows to geopolitical shocks, particularly when energy markets are directly affected.
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