Asian equities saw sharp foreign outflows exceeding $10.18 billion in the first week of November, as investors booked profits and grew cautious about lofty AI-driven tech valuations and the sustainability of recent market highs, according to LSEG data.
This marks a major reversal from the $2.28 billion in net inflows recorded in October.
🔹 Regional Breakdown
- 🇰🇷 South Korea: $5.05B outflows (vs. $4.21B inflows in Oct)
- 🇹🇼 Taiwan: $3.86B outflows (vs. $3.21B in Oct)
- 🇮🇳 India: $1.42B outflows (vs. $1.66B inflows in Oct)
- 🇻🇳 Vietnam: $95M outflows
- 🇹🇭 Thailand: $40M outflows
- 🇮🇩 Indonesia: $207M inflows
- 🇵🇭 Philippines: $77M inflows
“Foreign outflows in Korea and Taiwan equities are driven by weakness in leading AI-related companies, consistent with global headwinds across Japan and the U.S.,” said Jason Lui, Head of APAC Equity Strategy at BNP Paribas.
🔹 AI Rally Takes a Breather
The MSCI Asia ex-Japan IT Index dropped 4.23% last week after surging 62.5% in the previous six months.
Similarly, the MSCI Global IT Index slipped 4.38%.
“Renewed worries over elevated tech valuations have triggered volatility, but fundamentals remain solid,” said Mark Haefele, CIO at UBS Global Wealth Management, projecting 15% earnings growth in 2025 and 12.5% in 2026 for global tech.
The MSCI Asia Pacific ex-Japan Index now trades at a forward PE of 15.8x, the highest since mid-2021.
🔹 India: The AI Hedge
Despite short-term outflows, HSBC sees India as a diversification play for investors reducing AI exposure:
“India is now the biggest underweight in GEM portfolios. It’s a good AI hedge and will be an outsized beneficiary of new EM inflows,” the bank said.
📊 Insight:
The rotation out of AI-heavy markets like Korea and Taiwan shows investors are rebalancing risk exposure after an extraordinary six-month tech rally — with India and Indonesia emerging as relative safe havens for the next wave of EM capital.