Foreign Investors Withdraw Nearly $50 Billion from Asian Equities as AI Spending Concerns Intensify

Net outflows from equities in South Korea, Taiwan, India, Indonesia, Thailand, Vietnam and the Philippines reached $49.77 billion during the month, according to data cited by Reuters. It was the largest monthly withdrawal since June and reflected growing investor caution towards markets that have benefited from the global technology investment boom.

Taiwan experienced the largest outflow, with foreign investors withdrawing $30.68 billion, its biggest monthly reduction since at least 2008. South Korea recorded withdrawals of $14.59 billion, underscoring pressure on two markets closely tied to the global semiconductor supply chain.

The selling was partly driven by questions over whether investment in artificial-intelligence infrastructure can generate returns sufficient to justify current valuations. Technology companies and their suppliers have committed substantial resources to data centres, advanced chips and computing capacity, but investors are increasingly examining how quickly those investments can translate into sustainable earnings and cash flow.

Concerns have also emerged over the potential effect of tighter environmental reviews and AI-related regulation on data-centre construction and semiconductor demand. Such restrictions could affect the pace of infrastructure development and the expectations underpinning technology-sector valuations.

The withdrawals extended into November, with investors pulling a further $22.6 billion from the regional markets covered by the Reuters report. The continued movement suggests that the reassessment is not limited to a temporary adjustment at the end of October.

India recorded $3.6 billion in foreign equity outflows during October, its second consecutive month of withdrawals. However, the market attracted $5.68 billion in November so far, while Vietnam and the Philippines registered modest inflows.

Analysts also pointed to the relative underperformance of Asian equities against global markets and the possibility that investors were reallocating funds towards US shares and government bonds.

The developments create a challenge for regional markets that have relied on international capital to support valuations and corporate financing. While demand for AI-related products remains substantial, investors are becoming more selective about the companies and markets positioned to benefit from the expansion.

For Asian technology economies, the immediate test will be whether earnings growth and investment returns can restore confidence in the sector.