Australia's largest companies, particularly the big miners and banks, stand to benefit from a marked rise in foreign investors ploughing money into the ASX.

Since 2016, the amount of money invested into Australian equities from overseas has tripled to just under $10 billion on a three-quarter moving average basis, according to ABS data.

At the start of 2017, foreign investors, who already own a majority of Australian's financial corporations and miners, were pumping money into the ASX at around twice the rate of local investors.

Foreign inflows tend to be a leading indicator of the performance of the largest 20 ASX stocks by market capitalisation.

Growth in the ASX20 has lagged the benchmark ASX200 index since 2016, causing the ASX20's share of the ASX200 to shrink to just over 60 per cent of the index by market capitalisation - a historically low share based on long-term trends. 

If the previous relationship to foreign inflows is any guide, they could do better in coming months, wrote Deutsche Bank strategist Tim Baker and research associate Joseph Kim in a recent note.

"Offshore investors tend to be attracted to larger stocks, given the greater liquidity," they wrote.  "Consistent with this, we find that the ASX20 tends to outperform when foreign flows are relatively firm. The relationship suggests more relative upside for the ASX20."

The analysts have an overweight recommendation on the large miners and banks, with the top picks being Rio Tinto and Westpac. 

Australia's low rate of policy uncertainty, high population growth, cheap currency, earnings out-performance and relatively high dividend yield are some of what has made the ASX attractive to foreign investors.

After several years of soft earnings, in 2017, Australia's companies have higher forward earnings projections and a higher rate of upward earnings revisions than is common in both developed and emerging markets, the analysis explains.

Meanwhile, the Australian dollar - which is eyeing off a three-month low due to a plunge in the iron ore price and a rebound in the US dollar - is around 15 per cent below its decade average against the greenback, and 5 per cent below its trade-weighted decade average.

Despite a weakening currency through 2013 to 2015, foreign capital inflows didn't strongly pick up until the middle of 2016, and so there's "now scope for catch-up". 

The average dividend yield across the ASX, of around 4 per cent, remains well above the global average of 2.5 per cent.

"And this holds across most industries", the Deutsche Bank analysts wrote. "While yield stocks are themselves not in favour, high yields are still likely to catch investors' eyes given nominal global growth remains below average."