Foreign Investors Pivot to Taiwan Stocks After AI Selloff, Net Buying $1.7 Billion This Month
Nashnova编辑部
After July's broad AI sell-off, foreign investors have net-bought $1.7 billion in Taiwanese equities this month while pulling $6.2 billion out of South Korea — a split that shows capital gravitating toward lower volatility and steadier earnings as it repositions around AI.
Where is the money going — and where is it leaving?
Foreign funds turned net buyers of Taiwanese stocks last week, ending six straight weeks of net selling.
South Korea saw the opposite: $6.2 billion in net outflows over the same period.
This means → investors are voting with their wallets, tilting the risk-preference scale squarely toward Taiwan.
Why do foreign funds prefer Taiwan?
Twelve-month forward earnings for Taiwan's weighted index were revised up 9.5% last month; Korea's KOSPI saw only 7.4% — the first time in nearly a year that Taiwan led.
Société Générale strategist Frank Benzimra notes Taiwan's tech sector is anchored by foundries like TSMC, whose earnings swing less with the cycle.
In plain terms = TSMC makes chips for everyone and gets paid regardless of who wins; Samsung and SK Hynix sell memory chips — a commodity whose price swings wildly with supply and demand.
What is wrong with the Korean market?
Korea's market carries far heavier leverage and speculative positioning than Taiwan's.
Vantage Global Prime analyst Hebe Chen points out: even a small shift in expectations can trigger outsized swings without any real deterioration in fundamentals.
This means → Korea's drop is not purely a fundamentals story — leverage amplified the panic.
Could Korea's deeper fall actually be an opportunity?
The KOSPI's valuation discount has widened to a record level after this sell-off.
Isaac Thong, senior investment director at abrdn's Asia Income Fund, says Korea "looks relatively attractive given current valuations, because Taiwan hasn't fallen as much."
In plain terms = Taiwan is steadier but pricier; Korea is cheaper but riskier — a classic "stability vs. bargain" trade-off.
Can this divergence last?
The July sell-off is still fresh; whether this week's mild Asian rebound holds — and cements investor preference — remains unclear.
Long-term performance in both markets hinges on whether the AI industry can monetise — whether heavy R&D spending converts to returns and supply-chain momentum continues.
Benzimra calls "AI monetisation" the "core long-term risk." This reflects a deeper signal: capital is choosing Taiwan not because Taiwan is guaranteed to win, but because in the phase of highest uncertainty, investors instinctively lean toward the side with greater certainty.
Content is for reference only, not financial advice.