Foreign Investors Pull $25.48 Billion From Asian Stocks In July; Taiwan Leads Outflows

Foreign investors sold Asian equities for a ninth straight month in July, with Taiwan and South Korea bearing the brunt of selling as concerns over artificial intelligence (AI) spending and chip demand hit technology-heavy markets.

Foreign investors sold a net $25.48 billion worth of stocks across South Korea, Taiwan, India, Indonesia, Thailand, Vietnam and the Philippines during July, according to London Stock Exchange Group (LSEG) data.

Taiwan Sees Most Outflows

Taiwan accounted for most of the outflows. Foreign investors pulled $22.95 billion from Taiwanese equities last month, compared with around $8 billion in June. The heavy selling puts the Taiwan index share market in focus as investors assess the impact of weaker sentiment towards technology stocks.

South Korea recorded another $6.26 billion in foreign outflows, marking its third consecutive month of withdrawals. Investors tracking Kospi saw continued pressure on the country's technology-heavy equities during the month. Vietnamese stocks saw marginal foreign selling of $12 million.

India Bucks Regional Selling Trend

India was among four markets to record foreign inflows in July. Investors bought a net $2.12 billion worth of Indian equities during the month. Thailand received $1.46 billion, while Indonesia and the Philippines recorded inflows of $88 million and $69 million, respectively.

The inflows into these four markets partly offset the heavy withdrawals from Taiwan and South Korea.

AI Spending Concerns Weigh On Tech Stocks

Regional technology exporters came under pressure during July after Alphabet and Tesla reported negative cash flows. The reported cash flows raised concerns about the pace of growth and rising cash burn among companies linked to the AI investment cycle.

Analysts said that heavy selling hit AI-focused stocks in South Korea and Taiwan as investors reassessed expectations for chip demand and companies’ ability to meet their debt repayments.

Analysts also pointed to Moonshot’s announcement of low-cost AI models in China as another factor that weakened sentiment towards the region’s technology stocks. For investors studying historical Kospi data, the latest foreign selling adds to a three-month run of outflows from South Korean equities.

The sharp moves in AI-related sectors have also prompted global investors to look for greater diversification, according to experts. This shift is also relevant for investors evaluating investing in the Kospi amid continued volatility in Asian technology stocks.

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