South Korea and Taiwan Biggest Beneficiaries of AI Investments

Foreign investors significantly increased their investments in Asian equities in June, reversing two months of selling, due to easing U.S. price pressures and expectations of Federal Reserve interest rate cuts. A surge in global AI-linked firms also boosted demand for tech and semiconductor exports from Asia. South Korea and Taiwan saw significant foreign investments, with $3.83 billion and $1.94 billion, respectively, benefiting from increased AI investments.

Foreign investors bought a net $7.16 billion worth of regional equities in markets such as South Korea, India, Taiwan, Indonesia, Vietnam, Thailand, and the Philippines. Steady U.S. inflation in May aligned with economists' forecasts, reinforcing expectations of potential Fed rate cuts. Fed Chair Jerome Powell confirmed the U.S. is back on a "disinflationary path."

The MSCI Asia Pacific IT index rose nearly 10% in June, marking its best performance in seven months. India attracted $3.19 billion in foreign funds, contrasting with a $3.06 billion net sell-off the previous month. The Indian economy is viewed positively, backed by Production Linked Incentives (PLI) schemes, favorable demographics, and strong foreign direct investment (FDI).

Despite the overall positive trend, Thailand, Vietnam, the Philippines, and Indonesia experienced net outflows totaling $1.79 billion. Overall, the outlook for Asian equities remains constructive, supported by favorable economic conditions and robust investment trends in technology sectors.