2023 Was a Wild Ride for Investment in Southeast Asia
The DiplomatAlthough several ASEAN countries recently joined a cross-border digital payment system, the fact remains that the global financial system follows the U.S. dollar. Low interest rates also drove big foreign direct investment flows into the region, as investors chased higher yields wherever they could be found. And, as expected, this caused investment flows to start reversing out of Southeast Asian markets and into U.S. financial assets, which were now paying higher rates of interest. Between 2022 and 2023 the market cap of companies listed on the SET contracted by 15 percent and the robust direct investment flows dried up. The Indonesia Stock Exchange has also kept humming along, with the market cap of all listed companies increasing by 15 percent in 2022, and by another 8 percent through third quarter of 2023.