The US-China trade war, which intensified in August, stoked fears that the global economy would tip into recession, undermining riskier assets such as Asian equities. The MSCI's broadest index of Asia-Pacific shares, fell 3.4% last month, its biggest decline since May. Apart from an escalation of the US-China trade war, turmoil in Hong Kong and the risk of a hard Brexit added to the jitters within the market, prompting foreign outflows from riskier Asia, said Jingyi Pan, a Singapore-based market strategist with financial services firm IG.
Taiwan and South Korea - which form a major part of supply chain to China's exports - had foreign outflows of $3.87 billion and $2.49 billion, respectively. India suffered an outflow of $2.5 billion in the face of worries over declining economic growth, steep share valuations and a prolonged slowdown in its auto sector. The Indian economy, the third largest in Asia, expanded just 5% on-year in the three months ended June - the lowest pace since March 2013, official data showed on Friday, far below the 5.7% forecast in a Reuters poll.
Indonesia and Philippines saw outflows of $652 million and $226 million, respectively. Regional shares were also let down by lacklustre earnings performance by Asian firms in the second quarter. Refinitiv data showed that 55% of Asian firms missed their consensus earnings' estimates in the April-June quarter. However, Asian shares are up this month on hopes the talks between the United States and China early in October would help de-escalate their trade dispute, bringing some relief to regional economies.