SHANGHAI [Sep 10]: Foreign investors returned to Asian equities in August, ending a nine-month run of net selling as technology shares tied to artificial intelligence regained appeal following a sharp July decline and stronger-than-expected corporate earnings.
Investors purchased a net $4.72 billion of stocks across Taiwan, South Korea, India, Indonesia, Thailand, Vietnam and the Philippines during August, according to LSEG data. Regional equities have attracted another $1.52 billion in foreign investment through Tuesday’s close this month.
The MSCI Asia-Pacific index excluding Japan climbed 3.01% in August after falling to a three-and-a-half-month low of 797.6 in July. Optimistic forecasts from major U.S. technology companies, including Amazon, Microsoft and Nvidia, helped reinforce expectations for sustained demand among Asian technology exporters.
Corporate earnings have also strengthened the investment case. Data covering 2,108 large- and mid-cap Asian companies showed that businesses exceeded analysts’ earnings expectations by an average of 10.2% in the latest quarter. Aggregate profits increased 44.7% from a year earlier, while technology companies posted an 88.3% rise.
“The latest foreign inflows appear to reflect a renewed AI allocation rather than a broad-based return to Asia,” said Song Zhe, a senior investment specialist for Asia ex-Japan and global emerging market equities at BNP Paribas Asset Management.
Taiwan was the biggest beneficiary of the renewed foreign demand. Overseas investors bought a net $11.15 billion of Taiwanese stocks in August, bringing a two-month selling streak to an end.
South Korea moved in the opposite direction. Foreign investors withdrew a net $8.65 billion from Korean equities, marking the fourth consecutive month of outflows. However, sentiment has improved in September, with foreign investors purchasing $1.1 billion of South Korean stocks so far this month.
Taiwan has also continued to attract capital, receiving $1.45 billion in foreign purchases so far in September.
India recorded its second consecutive month of foreign net buying in August, with overseas investors purchasing $3.1 billion of Indian equities.
Elsewhere in the region, Indonesia attracted $68 million and Vietnam received $11 million in foreign investment. Thailand and the Philippines, meanwhile, recorded net outflows of $749 million and $216 million respectively.
Zhe said the renewed interest in artificial intelligence, stronger technology earnings and improved investor positioning could support North Asian markets, particularly Taiwan and selected Korean technology companies.
At the same time, he cautioned that rising bond yields, higher oil prices and geopolitical risks could continue to produce market volatility. In that environment, investors may favor companies with clear earnings-upgrade potential and direct exposure to AI infrastructure.
