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Capital drain from Asia jumps in August, though outlook is positive

Capital outflow from Asian equities grew last month when dissensions with North Korea spurred big investors to book profits, however, economists forecasted funds would come back thanks to positive income momentum and compelling valuations.

High-profile investors got rid of $4 billion in August, as figures from seven exchanges of the region, among which are India and Indonesia, showed.

Nomura’s Jim McCafferty said that discord linked to North Korea intensified, which forced investors to book profit last month. But the mood is upbeat for the rest of the year, earnings momentum has been okay and Asia is still less expensive than the US, he also said.

According to Thomson Reuters, Asian companies earned in the second quarter 7% more than they had anticipated, and the leaders were Japanese, South Korean, and Chinese businesses. Data also shows that Chinese industrial companies reported even more surplus profits, due to the construction boom that brought up demand and hiked prices for all of the building supplies.

Chinese economy is on a steady route of growth, consumer sentiment in Japan is changing for the better, and profits season in the country has shown robustness, McCafferty explained.

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