(Aug 23): Equities in Indonesia and Malaysia are standing out as bright spots in Asia this month as global investors trim their exposure to almost every other market in the region.

Overseas funds have bought US$684 million (RM3 billion) of Indonesian stocks on a net basis in August through Thursday, while putting about US$241 million in Malaysian shares. Both markets are poised to see a second straight month of inflows. The Philippines is the only other Asian nation to lure foreign money in August — having drawn about US$105 million, data compiled by Bloomberg for 11 regional markets show.

India, which has been a darling of emerging-market investors in recent years, has seen an equity outflow of US$1.8 billion — the biggest in the region. Japan and Taiwan are next in terms of withdrawals.

“India is expensive, China’s economy is faltering, but Indonesia and Malaysia don’t have those problems,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital. “They may get even more attention in the coming quarters,” especially Malaysia, given the bets on its data centre boom, he said.

Indonesia is benefiting from its fiscal discipline and economic growth, while Malaysia is riding the artificial-intelligence wave after wooing billions of dollars in data centre investments. The ringgit and the rupiah are the top performers against the dollar this month in a basket of 23 emerging-market currencies as overseas funds are boosting holdings of the nations’ bonds too.

That said, it remains to be seen if the two Southeast Asian markets can keep their momentum in terms of inflows at a time when the Federal Reserve’s imminent rate cuts are expected to boost the allure of emerging markets in general. Chair Jerome Powell is slated to deliver a keynote speech in Jackson Hole at 10am New York time on Friday.

Indonesia’s stocks and the rupiah slid on Thursday amid nationwide protests against some proposed changes to election laws, forcing lawmakers to drop their plans.

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