Key facts
- Foreign investors have withdrawn a net $27.08 billion from Asian equities in June.
- The MSCI Asia Pacific Index is down 4.34% for the month.
- South Korea and Taiwan experienced the largest foreign sales.
- Broadcom's underwhelming earnings and Middle East tensions are cited as reasons for outflows.
Asian equities are experiencing a significant surge in foreign outflows during June, with investors withdrawing a net $27.08 billion from regional stocks. This trend surpasses the $24.08 billion withdrawn in May and is attributed to escalating Middle East hostilities and a pullback in technology stocks, particularly those linked to AI.
The MSCI Asia Pacific Index, after reaching a record high last week, has fallen 4.34% this month. This decline is partly due to lower-than-anticipated second-quarter earnings from chipmaker Broadcom and Meta's fundraising plans, which have pressured the technology sector. Analysts note that while AI and semiconductor stocks remain market leaders, they also represent a significant risk if growth expectations are not met.
South Korea and Taiwan, key exporters of AI hardware and chips, are leading the outflows, with foreign sales totaling $12.63 billion and $8 billion respectively so far in June. In May, foreigners sold $27.88 billion of South Korean stocks and bought $8 billion of Taiwanese shares.
Indian equities have also seen substantial foreign selling, with net outflows of $5.91 billion this month, following $3.45 billion in sales in May. The Reserve Bank of India recently maintained its benchmark interest rate but revised its growth and inflation forecasts for the current fiscal year.
In other markets, Indonesia and the Philippines experienced foreign sales of $571 million and $29 million, respectively. Conversely, Thailand and Vietnam saw modest foreign buying of $55 million and $5 million.