Foreign investors injected significant capital into Asian equities in February, driven by a resurgence in Chinese stocks following Beijing's implementation of reform measures and a surge in technology shares propelled by the artificial intelligence (AI) boom.
According to data from stock exchanges in South Korea, Taiwan, Indonesia, India, the Philippines, Thailand, and Vietnam, foreign investors acquired a net total of $10.82 billion worth of regional equities last month, reversing the trend from January when shares valued at nearly $779 million were sold.
The MSCI Asia-Pacific index rebounded with a 4% increase, countering the decline observed in January. This shift was attributed to traders redirecting their focus from concerns about delayed rate cuts by the U.S. Federal Reserve to positive Asian corporate earnings.
The majority of the capital inflows were directed towards South Korea and Taiwan, acknowledged as the region's tech hubs, receiving $6.1 billion and $3.7 billion, respectively.
Market strategist Yeap Jun Rong from IG noted, "The artificial intelligence (AI) hype continued in February, with investors showing a preference for semiconductor stocks. Given that South Korea and Taiwan are the region's semiconductor hubs, this likely contributed to the substantial inflows into their equities."
Indonesian, Indian, Philippine, and Thai equities attracted inflows of $647 million, $186 million, $129 million, and $93 million, respectively.
Contrastingly, Vietnam experienced a marginal outflow of $59 million, diverging from the net purchases of $48 million in the previous month.
Jason Lui, head of equity and derivative strategy for Asia Pacific at BNP Paribas, highlighted the potential impact of major elections in the region and the U.S. on investment decisions.
"The combination of rising trade tensions (Donald Trump considering new rounds of tariffs) and the Fed potentially staying on hold for longer may lead to more conservative allocations into EM Asia equities," he said.
"In the case of India, foreign investors will be closely monitoring the election results, as Indian voters are expected to cast their votes between April and May."
Paraphrasing text from "Investing" all rights reserved by the original author.
