Foreign Investors Pulled $25 Billion From Asian Stocks in July as AI Doubts Spread
Taiwan and South Korea took the hardest hits as investors questioned chip demand and cash burn, while India, Thailand, Indonesia and the Philippines drew inflows.
Aug 11 (Reuters) - Foreign investors sold Asian equities on a net basis for a ninth consecutive month in July, with heavy selling in Taiwan and South Korea as concerns over AI spending and chip demand weighed on the region's technology-heavy markets.
Regional tech exporters came under pressure last month after Alphabet and Tesla reported negative cash flows, raising worries over the durability of growth and mounting cash burn.
"AI heavyweights in South Korea and Taiwan faced massive selloffs as investors started to question their chip-demand forecasts and debt-repayment ability," BNP Paribas analysts said in a July note, adding that China's Moonshot announcement about its low-cost AI models "aggravated negative market sentiment."
Foreign investors sold a net $25.48 billion worth of stocks across South Korea, Taiwan, India, Indonesia, Thailand, Vietnam and the Philippines last month, according to LSEG data.
Taiwan accounted for $22.95 billion of the outflows, following June's roughly $8 billion in outflows, and South Korea another $6.26 billion, marking a third consecutive month of outflows.
Vietnamese stocks also recorded marginal foreign outflows of $12 million last month.
Meanwhile, equities in India, Thailand, Indonesia and the Philippines logged foreign inflows of $2.12 billion, $1.46 billion, $88 million and $69 million, respectively, partly offsetting the withdrawals.
"The unusually high swings in AI-related sectors are making global investors diversify, and on that measure we think India looks better placed," said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC, in a note last week.
"We recently upgraded India to neutral within Asia," van der Linde wrote.
(Reporting by Gaurav Dogra; Editing by Janane Venkatraman)
