Global Investors Return to Asian Stocks Amid Strong Currencies and Earnings, Despite Tariff Concerns

Global investors are returning to Asian equities due to strong regional currencies and resilient corporate earnings, despite U.S. tariff concerns. Capital inflows into Asian emerging markets have increased for three consecutive weeks, the longest streak in over a year. The MSCI Asia ex-Japan Index rose nearly 16% in the past month, outperforming the MSCI World Index. The U.S. dollar's weakness has bolstered Asian currencies, enhancing investment appeal. Strong corporate earnings, particularly in India, South Korea, and Taiwan, further attract investors, while selective exposure to China continues amid regulatory concerns.

A Three-Week Rally Signals Renewed Confidence

According to Bloomberg, global funds have been net buyers of equities in Asian emerging markets—excluding China—for three consecutive weeks, the most sustained buying streak since early 2024. The MSCI Asia ex-Japan Index has climbed nearly 16% over the past month, significantly outperforming the broader MSCI World Index, which rose by about half that amount during the same period.

This surge in investor interest comes amid a backdrop of heightened trade tensions, particularly following the U.S. administration’s announcement of new tariffs on Chinese and other Asian imports. Yet, rather than retreating, investors appear to be doubling down on the region, betting that strong local currencies and robust earnings will cushion the impact of external shocks.

Currency Strength Bolsters Investment Appeal

One of the key drivers behind the renewed inflows is the recent weakness of the U.S. dollar. The greenback hit its lowest level since March 2022 in late April, prompting a shift in capital toward Asian currencies, which have appreciated in response. The Taiwanese dollar, South Korean won, and Indian rupee have all gained ground, making local assets more attractive to foreign investors.

As Lionel Lim reported in Fortune, the dollar’s slide has become a “bane” for Asia’s central bankers, but a boon for equity markets. A stronger local currency not only enhances the purchasing power of domestic consumers but also reduces the cost of imported goods, supporting corporate margins and profitability.

Corporate Earnings Show Resilience

Beyond currency dynamics, the region’s corporate earnings have shown surprising resilience. Companies across Asia, particularly in India, South Korea, and Taiwan, have reported solid first-quarter results, with many beating analyst expectations. According to data from Janus Henderson, 88% of global companies either raised or maintained their dividends in early 2025, with Asia contributing significantly to this trend.

In particular, dividend growth in Asia has been underpinned by strong cash flows and disciplined capital management. Aberdeen Investments notes that investors are increasingly favoring companies with robust balance sheets and consistent shareholder returns, especially in sectors tied to domestic consumption and services. These firms are seen as better positioned to weather external shocks than exporters or infrastructure-heavy businesses.

China’s Mixed Signals and Selective Exposure

While China remains a critical part of the Asian investment landscape, global funds have been more selective in their exposure. Ongoing concerns about regulatory unpredictability, property sector instability, and the impact of U.S. tech restrictions have led many investors to focus on Chinese companies with strong domestic demand profiles.

Aberdeen’s research suggests that within China, the most attractive opportunities lie in consumer-facing sectors and service industries with healthy cash flows. These companies are seen as more insulated from geopolitical risks and better aligned with Beijing’s policy pivot toward domestic economic resilience.

Despite these challenges, Chinese firms continue to demonstrate innovation and adaptability. As noted in Aberdeen’s analysis, many companies have shown “evidence of innovation, growing potential, and increasing consumer confidence,” suggesting that the region is capable of withstanding global economic headwinds.

Tariff Concerns Linger, But Don’t Deter

The elephant in the room remains the U.S. tariff regime. President Trump’s “Liberation Day” tariffs, announced on April 2, triggered a sharp selloff in global markets, with the S&P 500 and Nasdaq suffering their worst four-day slide since 2008. However, a temporary 90-day reprieve announced on April 9 helped markets recover, with the Dow and S&P 500 posting record single-day gains.

While the long-term impact of these tariffs remains uncertain, investors appear to be taking a pragmatic view. As reported by FastBull, upcoming U.S.-China trade talks and a new U.S.-U.K. trade deal have helped stabilize sentiment. Yardeni Research even predicts that trade tensions could ease by mid-summer, allowing markets to refocus on fundamentals.

Still, the risk of further escalation remains. As DJC Oregon noted, a significant portion of U.S. stocks remain well below their 52-week highs, reflecting ongoing investor caution. Yet in Asia, the narrative is different: strong earnings, favorable currency trends, and selective sectoral strength are driving a more optimistic outlook.

Gold and Alternative Assets Also See Inflows

The bullish sentiment toward Asia isn’t limited to equities. Gold ETFs based in Asia saw record inflows in April, with funds adding 69.6 tonnes of gold—a 27.8% increase from the previous month. According to Investing.com, the bulk of this demand came from China, where physical gold demand also surged.

This parallel trend suggests that while investors are optimistic about Asian equities, they are also hedging against macroeconomic uncertainty by increasing exposure to safe-haven assets. The dual strategy reflects a nuanced view of the region: one that acknowledges short-term risks but remains confident in long-term growth potential.

A Regional Rebalancing in Global Portfolios

The recent wave of investment into Asian markets marks a broader rebalancing in global portfolios. With U.S. equities facing valuation concerns and European growth remaining tepid, Asia offers a compelling alternative. The region’s combination of macroeconomic stability, corporate profitability, and currency strength is drawing capital away from traditional markets and into emerging opportunities.

As global funds continue to recalibrate their strategies, Asia’s role in the global investment landscape is becoming more prominent. The current three-week streak of net buying may be just the beginning of a longer-term shift toward the East.