BENGALURU: Asian equities are witnessing a surge in foreign outflows in June as escalating Middle East hostilities and a pullback in AI-linked technology stocks following underwhelming results by Broadcom prompt investors to trim exposure.
Foreign investors have withdrawn a net $27.08 billion from regional stocks so far this month, exceeding the combined net outflow of $24.08 billion in May, according to LSEG data covering exchanges in South Korea, Taiwan, Thailand, India, Indonesia, Vietnam, and the Philippines.
Market Performance and Key Drivers
The MSCI Asia Pacific Index hit a record 284.05 last week, but lower-than-anticipated second-quarter earnings from chipmaker Broadcom and Meta's fundraising plans pressured the hot technology sector. The index is down 4.34% so far this month.
South Korea and Taiwan – regional AI-hardware and chip exporters – lead the outflows, with a net $12.63 billion and $8 billion of foreign sales so far this month. Foreigners sold $27.88 billion of South Korean stocks but bought $8 billion of Taiwan shares in May.
Outlook and Implications
Analysts suggest that the ongoing geopolitical tensions and sector-specific headwinds could sustain the outflow trend in the near term. Investors are closely monitoring central bank policies and corporate earnings for further cues.
