Foreign investors yanked more than $10 billion out of major Asian stock markets during the first week of November. The sudden shift came as worries grew about sky-high tech stock prices and whether the recent market run could keep going.
Foreign fund managers offloaded $10.18 billion in stocks across seven Asian countries for the week ending November 7, LSEG data shows. That’s a complete turnaround from October, when these same investors bought $2.28 billion worth of shares. The selling hit Taiwan, South Korea, India, Thailand, Indonesia, Vietnam, and the Philippines.
South Korea took the biggest beating. Foreign investors dumped about $5.05 billion in Korean stocks last week, wiping out the $4.21 billion they’d pumped in during the month before.
Taiwan came in second for outflows. Foreign investors sold $3.86 billion worth of Taiwanese shares. That’s actually worse than October, when they’d already pulled $3.21 billion out of the market.
Jason Lui from BNP Paribas, who handles equity strategy for Asia-Pacific, broke down what’s happening. “Foreign outflows in Korea and Taiwan equities are primarily driven by the weakness in leading AI-related companies, which is consistent with the global headwinds across other markets such as Japan and the US,” Lui said, as mentioned in a Reuters report.
Tech stocks get hammered
Tech stocks across the region took a hit. The MSCI index that tracks Asian tech companies outside Japan fell 4.23% last week. This comes after the same index had jumped 62.5% in the six months through October. A global tech index dropped 4.38% in the same period.
Some experts think the selloff might be overdone. Mark Haefele, chief investment officer at UBS Global Wealth Management, says the underlying business fundamentals are still strong.
“Renewed worries over elevated tech valuations have triggered volatility, but solid fundamentals suggest current levels are justified,” Haefele said. “We forecast an earnings growth of 15% for global tech this year, followed by a solid 12.5% increase in 2026.”
According to a Cryptopolitan report Asian tech stocks may have better value than US AI rivals.
LSEG data puts the price-to-earnings ratio for the MSCI Asia Pacific index (excluding Japan) at 15.81 as of late October. That’s the highest it’s been since June 2021.
India sees money walk out the door
India wasn’t spared either. Foreign investors pulled $1.42 billion last week after putting $1.66 billion into the country in October.
HSBC’s Friday report points out that India has become the most underweighted market in global emerging market portfolios. Just one out of four funds HSBC tracks holds more Indian stocks than their benchmark suggests they should.
But HSBC sees a silver lining. “We see India as a good AI hedge and provides diversification for those who feel uncomfortable with the AI rally. India will be an outsized beneficiary of any additional money coming into the EM region,” the report said.
The smaller Southeast Asian markets went in different directions. Vietnam saw $95 million leave while Thailand lost $40 million. But Indonesia and the Philippines managed to pull in $207 million and $77 million, respectively.
The change in money flows shows foreign investors are getting nervous about tech stock valuations and questioning whether the rally that’s powered gains all year can continue.
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