Foreign investors have shown renewed confidence in Asian equities for the third consecutive month in July, pouring record-level funds into Taiwan and South Korea, driven by optimism around AI technology and economic growth prospects. Taiwan attracted $7.78 billion—the highest inflow since the 2008 global financial crisis—while South Korea drew $4.52 billion, the largest since February 2024, according to LSEG data.
The MSCI Asia ex-Japan index rose 2% in July, marking its fifth straight month of gains, while Taiwan’s and South Korea’s key benchmarks advanced about 6% each. The two countries, dominant exporters of tech products, have become magnets for AI-related investments amid improving global trade relations and reduced tariff uncertainties.
South Korea’s appeal is boosted by shareholder-friendly reforms, political stability, and solid corporate fundamentals, although recent tax reform concerns have raised some investor caution.
Thailand also saw a return of foreign investment with $499 million inflows in July—the first since September last year—driven by attractive valuations following prolonged selling. However, political uncertainty, macroeconomic challenges, and a strong currency weigh on a more robust recovery, despite a 14% jump in the SET index, its best monthly performance since November 2020.
Meanwhile, Indian markets faced outflows exceeding $2 billion, breaking a three-month buying streak, while Indonesia and the Philippines also saw net withdrawals. Vietnam attracted $326 million as investors favored its strong growth outlook and favorable U.S. tariff terms.