The Iran war triggered a record wave of foreign selling in Asian markets. Foreign investors have sold approximately $52 billion worth of Asian stocks (excluding China) since the start of the war. According to Bloomberg data, this marks the largest monthly outflow since 2009. The amount of selling exceeded the record set during the COVID-19 pandemic by 49% and was 148% higher than the outflow during the Russia-Ukraine war in June 2022.

Economies heavily reliant on oil imports have taken the hardest hit. Taiwan led the way with approximately $25 billion in sales, followed by South Korea with around $13.5 billion and India with around $10 billion. Technology-heavy markets like those in Taiwan and South Korea, as well as the Indian market, faced the risk of stagflation due to the sharp rise in oil prices. The Iran war disrupted Middle Eastern energy supplies, driving oil prices to the $100 mark and worsening the outlook for the region's economies.

These outflows, continuing throughout March, highlight similar risks for emerging markets outside of Asia. Analysts say the oil shock has lowered global growth expectations and reduced risk appetite. Current data suggests March could be the worst month for capital outflows from Asia in history.
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