By Patturaja Murugaboopathy and Gaurav Dogra
(Reuters) - Foreigners turned net sellers of Asian equities in January, after three consecutive months of buying, as they booked profits amid worries over rising coronavirus cases and lofty stock valuations.
Overseas investors were net sellers of a combined total of $5.52 billion in South Korean, Taiwanese, Philippine, Thai, Vietnamese, Indonesian and Indian stocks last month, stock exchange data showed.
For a graphic on Foreign investments in Asian equities:
https://fingfx.thomsonreuters.com/gfx/mkt/xklpylrnwvg/Foreign%20investments%20in%20Asian%20equities.jpg
Global COVID-19 cases crossed over 100 million last month with more than 2 million dead, and some delay in vaccine distribution around the world also curbed risk appetite.
The MSCI's broadest index of Asia-Pacific shares' forward 12-month price-to-earnings ratio (P/E) surged to 17.42 at the end of January, the highest since September 2009.
After pouring over $4 billion in South Korean and Taiwanese equities in the last quarter of 2020, foreigners took out vast amounts of money from the two markets in January.
South Korea faced outflows of $5.3 billion, while Taiwan saw net sales of $3.3 billion.
South Korea, which had initial success in containing the pandemic, has experienced its third and strongest wave of infections this winter, and also faced criticism it was slow to secure vaccines for its 52 million people.
"Korea is behind in rolling out its vaccine with the Korean Disease Control and Prevention Agency promising to inoculate 70% of its 52m population by September", brokerage firm Jefferies (NYSE:JEF) said in a report.
"We downgrade (South Korean equities) to Modestly Bullish as the equity market looks expensive versus bonds," the report said.
On the other hand, Indian and Indonesian equities lured $2.66 billion and $1.1 billion, respectively, in inflows last month.
Herald van der Linde (NYSE:LIN), head of Asia equity strategy at HSBC, said investors are moving towards markets such as ASEAN countries, which lagged in price performance last year.
"There is some rotation between markets going on," he said.
For a graphic on Asia COVID-19 vaccination:
https://fingfx.thomsonreuters.com/gfx/mkt/ygdvzaldrpw/Asia%20COVID-19%20vaccination.jpg