Investors are fleeing emerging Asian markets at the fastest pace in nearly four years as escalating conflict in the Middle East triggers a massive reassessment of global risk. This week, global funds pulled more than $10 billion from developing Asian stocks, marking the largest weekly outflow since March 2022.
While the retreat has been most severe in Taiwan ( nearly $8 billion), South Korea, and India, the Stock Exchange of Thailand (SET) has also felt the sudden shift in sentiment. For much of early 2026, Thailand acted as a relative haven; between 1 January and 5 March, foreign investors buoyed the market with a substantial net buy of 51,984.86 million baht. This influx was largely driven by capital rotating out of volatile Western markets and fleeing complications surrounding Indonesia’s MSCI and FTSE status.
However, that support evaporated as geopolitical tensions peaked. By 5 March 2026, foreign investors executed a sharp U-turn, recording a single-day net sell of 7,208.23 million baht. This contributed to a total foreign net outflow of 6,841.50 million baht for the first five days of March, signaling that even previously favored markets are no longer immune to the regional selloff.
Still, the U.S. dollar’s recent rebound, following the outbreak of conflict between the United States, Israel, and Iran, could prove temporary. Foreign exchange strategists highlighted ongoing concerns over the safe-haven status of U.S. assets and reiterated forecasts for two interest rate reductions by the Federal Reserve before the year ends.
Currency specialists, surveyed by Reuters, indicated that most market participants remain skeptical about the dollar’s ability to maintain its upward momentum, despite its recovery from recent lows. Since December, there has been a prevailing trend of traders taking short positions on the greenback, signaling expectations of continued depreciation.
