Asian equities witnessed their largest monthly foreign outflows in nearly six years in November, driven by a selloff in high-flying technology stocks as concerns over stretched valuations prompted investors to cut exposure.
Foreigners sold a net $22.1 billion of shares in November across Taiwan, South Korea, India, Thailand, Indonesia, Vietnam and the Philippines, marking the heaviest monthly outflow since the $33.32 billion net sale in March 2020, LSEG data showed.
Taiwan saw $12.04 billion in net foreign selling, while South Korea recorded $9.75 billion, its biggest monthly outflow since March 2020.
Herald van der Linde, head of equity strategy for Asia Pacific at HSBC, said the moves reflected rising unease about how long the artificial intelligence (AI)-driven rally could last.
"Investors in recent years built a very high level of concentration on a few AI-related trades, so even a minor deviation from sky-high expectations can cause significant market fluctuations," he said.
India, Thailand and Vietnam also saw foreign withdrawals of $425 million, $388 million and $286 million, respectively.
Bucking the trend, Indonesian and Philippine equities attracted $731 million and $59 million in foreign inflows.
Sentiment has improved slightly in December, with Taiwan and South Korea drawing $2.58 billion and $1.84 billion in foreign inflows by Wednesday’s close.
Heavy hyperscaler spending on AI infrastructure through 2026-27 is likely to keep chip supply tight, supporting earnings for Asian semiconductor firms and underpinning valuations even if an AI bubble eventually forms, Goldman Sachs said.
The MSCI Asia-Pacific Index has risen 23.13% so far this year and is on track for its strongest annual performance in eight years.
"Asia equities delivered a resilient performance in 2025, supported by policy measures, robust domestic demand, and AI-driven innovation across key markets," said Mike Shiao, chief investment officer for Asia ex-Japan at Invesco.
"Looking ahead, we expect the U.S. dollar to remain on a weakening trajectory, a trend that has historically benefited Asia equities." - Reuters
