Net foreign selling of US$2.2 bn over the last seven days. It appears that foreign investors are taking the Sell in May message to heart with Figure 1 highlighting net foreign selling over the past seven days of US$2.2 bn. Significantly, almost 90% of that foreign selling has been in Taiwan (US$1.9 bn) alone. As a result, we now have foreign investor capitulation in every market including Taiwan. We define foreign investor capitulation as foreigners turning net sellers on a rolling 12-month basis. After Taiwan, Indonesia has seen the second biggest net foreign selling of US$182 mn. The only market not associated with foreign selling in aggregate over the past seven days is Korea.

　　Taiwan goes from 0.4% to -0.2%. On a rolling 12-month basis, we highlight that foreigners have gone from net foreign buying of 0.4% of market cap on 31 March 2016 to -0.2% currently in Taiwan (see Figure 2). On this measure, markets seeing the greatest capitulation are Thailand and Japan (both -1%), Philippines and Korea (both -0.7%), Malaysia (-0.6%) and Indonesia (-0.5%).

　　Taiwan also back in Cheapest 4. While Taiwan is associated with large cuts to 2016E consensus EPS (-1.2% in April, -0.6% in May so far), we highlight that Taiwan is back in the Cheapest 4 (see our report of 21 April Cheapest 4: Japan Out, Taiwan In) and is now seeing foreign investor capitulation too.