Asian markets lose $10 million as AI growth stalls.
Foreign investors pulled out about $10.18 billion from stocks in Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines in the week ending Nov. 7, compared with a net purchase of $2.28 billion in October, according to the data. South Korean stocks saw the largest outflows, at about $5.05 billion, compared with $4.21 billion in the previous month. Taiwanese stocks also saw $3.86 billion in outflows, up from $3.21 billion in October.
Jason Lu, head of Asia-Pacific equity and derivatives strategy at a major French banking group, said foreign capital outflows from Korean and Taiwanese stocks were largely driven by weakness in leading AI companies, in line with global markets such as Japan and the United States.
MSCI’s Asia ex-Japan IT index fell 4.23 percent last week after rising more than 62 percent in the six months to October. MSCI’s world IT index also fell 4.38 percent.
Mark Hafele, chief investment officer at UBS Global Wealth Management, added that renewed concerns about high valuations in tech stocks had caused volatility, but strong fundamentals justified current levels. He predicted global tech company profitability would rise 15 percent this year and 12.5 percent next year.
Indian stocks also saw $1.42 billion in foreign capital outflows last week, compared with $1.66 billion in inflows last month. India is now the biggest underweight in emerging markets portfolios, with only a quarter of the funds we track overweighting India compared to their benchmarks, a recent report by British bank HSBC showed. The report added: “India is a good option for diversification against the rise of AI and will benefit the most from any new capital inflows into the emerging markets region.”
Vietnam and Thailand also saw $95 million and $40 million in foreign capital outflows, respectively, while Indonesia and the Philippines saw $207 million and $77 million in inflows.