According to Bloomberg data, overseas investors sold about $2.2 billion in equities in the region's emerging economies in April, net of China. That will end the longest string of purchases dating back to 2017.

Taiwan has led the outflows this month, with South Korea experiencing a net influx. The MSCI EM Asia Index is just about to give up its year-to-date gain. The gauge had risen as high as 4.6% this year until last week, when concerns grew that the Federal Reserve may postpone rate decreases.

Following a spate of surprisingly high inflation readings, Fed Chair Jerome Powell said Tuesday that policymakers will wait longer than expected before cutting interest rates. Investors are afraid that the Fed's delay will prompt emerging market central banks to postpone rate reduction.

Persistently high borrowing rates due to a robust US economy, along with rising oil costs, will increase cost pressures from a stronger dollar and Asia's reliance on imported energy. Higher US interest rates further increase the investing appeal of Treasuries as a safer alternative to the region's stocks.

According to Jason Ng, a Morgan Stanley strategist, active emerging market funds witnessed a $2.7 billion outflow in March as bets increased that the Fed will delay softer policy. Notably, they eliminated tech-heavy Taiwan while increasing posts in Saudi Arabia, Turkey, and the United Arab Emirates, he noted in a study.