Taiwan, South Korea drive Asian equity outflows in July as AI worries bite

Aug 11 (Reuters) - Foreign investors sold Asian equities on a net basis for a ninth consecutive month in July, with heavy ​selling in Taiwan and South Korea as concerns over ‌AI spending and chip demand weighed on the region's technology-heavy markets.

"AI heavyweights in South Korea and ⁠Taiwan faced massive selloffs as investors started to question ​their chip-demand forecasts and debt-repayment ability," BNP Paribas analysts said ​in a July note, adding that China's Moonshot announcement about its low-cost AI models "aggravated negative market sentiment."Monthly foreign investment flows into Asian equities by country

Source: Local stock exchanges, LSEGForeign investors sold a net $25.48 billion worth ​of stocks across South Korea, Taiwan, India, Indonesia, Thailand, Vietnam ​and the Philippines last month, according to LSEG data.

Taiwan accounted for $22.95 billion ‌of ⁠the outflows, following June's roughly $8 billion in outflows, and South Korea another $6.26 billion, marking a third consecutive month of outflows.

Vietnamese stocks also recorded marginal foreign outflows of $12 million last month.

Meanwhile, ​equities in ​India, Thailand, Indonesia ⁠and the Philippines logged foreign inflows of $2.12 billion, $1.46 billion, $88 million and $69 million, respectively, partly offsetting ​the withdrawals.

"The unusually high swings in AI-related ​sectors are ⁠making global investors diversify, and on that measure we think India looks better placed," said Herald van der Linde, head ⁠of equity ​strategy for Asia Pacific at HSBC, ​in a note last week.

"We recently upgraded India to neutral within Asia," van ​der Linde wrote.

Reporting by Gaurav Dogra; Editing by Janane Venkatraman.Our Standards: The Beyond Headlines