South Korean And Taiwanese Equities Soar As AI Demand Surges

May saw a significant increase in foreign investment in South Korean and Taiwanese stocks due to a surge in interest in artificial intelligence (AI) and the ensuing demand for shares of the region's hardware exporters.

The most sum since November 2022, according to data from stock exchanges in South Korea, Taiwan, India, Indonesia, the Philippines, Thailand, and Vietnam, foreigners bought a net $11.74 billion worth of regional shares in May.

Particularly, Taiwanese stocks saw a significant influx of $4.4 billion, followed by South Korean stocks with a $3.1 billion inflow. About 64% of the overall inflows into the region last month came from these two markets.

The emergence of ChatGPT, which was introduced last year, has ignited a global rally in chipmaker prices and fueled the AI craze.

According to Yeap Jung Rong, market strategist at IG, "the chase for semiconductor stocks on optimism surrounding AI demand has been a key theme for investors," and South Korea and Taiwan's significantly higher exposure to that industry may be the reason for the greater amount of net inflows compared to the rest of the region.

In the meantime, encouraged by the country's robust economic growth in the March quarter, foreign investors purchased Indian stocks worth a net $5.3 billion, their largest monthly acquisition since August 2022.

"The GDP growth print was a significant positive surprise, and strong bank credit growth and GST collections are underscoring robust corporate growth outlook, we believe," said Manishi Raychaudhuri, Asia-Pacific head of equity research for BNP Paribas.