Korea Sheds $6.2 Billion in August as Asia Rotates Away From AI

Foreign investors pulled $6.2 billion out of South Korean stocks in August. Taiwan drew $1.7 billion, ending a six week selling streak, Bloomberg-compiled data shows.

The split points to a broader pattern. Money is rotating out of Korea’s chip-heavy KOSPI toward markets seen as steadier bets on artificial intelligence (AI).

A Wider Asian Reshuffle

The Korea-Taiwan swing is part of a larger regional shift. Foreign investors sold a net $25.48 billion of Asian equities in July. It was the ninth straight month of net outflows.

Taiwan and South Korea alone lost more than the region’s entire net outflow in July. Taiwan shed $22.95 billion that month, separate from August’s swing back to inflows. Korea shed $6.26 billion in July, a July total distinct from the $6.2 billion August outflow cited above.

Inflows into India, Thailand, Indonesia and the Philippines only partly offset those July losses.

Bloomberg-compiled data also shows analysts raised Taiwan’s 12-month earnings estimates faster than Korea’s last month. It was the first time in nearly a year that Taiwan’s revision moved ahead.

“The unusually high swings in AI-related sectors are making global investors diversify.”

Herald van der Linde, head of Asia-Pacific equity strategy at HSBC, made that point in a note cited by Reuters. He said the volatility currently leaves India comparatively better placed.

Why Korea Looks Riskier to Some Investors

Hebe Chen, senior market analyst at Vantage Global Prime, pointed to Korea’s heavier leverage and speculative positioning. She said that can magnify price swings even without any shift in fundamentals.

South Korea’s KOSPI posted its biggest fall since early March, late last month. The rout was driven by a slump in leveraged bets tied to Samsung Electronics and SK Hynix. A $19 billion leveraged AI-linked ETF unraveled in the process, hitting Korean retail investors hardest.

Not every investor sees Korea as the weaker bet, though. Isaac Thong, senior investment director at Aberdeen Asian Income Fund, disagrees. He said Korea looks relatively attractive given how far its valuations have fallen against Taiwan’s.

Where the Money Is Going Instead

Indian equities logged a $1.3 billion weekly foreign buy last month, the largest since mid-2025.

Global funds are favoring markets seen as less dependent on AI capital spending than Korea or Taiwan. Thailand, Indonesia and the Philippines also logged inflows in July, though on a smaller scale than India.

Thailand pulled in $1.46 billion over the same period. Indonesia and the Philippines logged smaller gains, at $88 million and $69 million respectively.

The gap in scale matters. Together, those four markets absorbed a fraction of what Korea and Taiwan lost. Analysts describe the move as a rebalancing act, not a wholesale return to the region.