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Foreign investors sold EM Asia for three consecutive weeks, South Korea and Taiwan technology stocks were under pressure, and Southbound provided hedging with domestic investors in

2026-07-12·ima-daily5min-0712-07-3029dd7e39

Street Signal | Foreign investors sold EM Asia for three consecutive weeks, South Korea and Taiwan technology stocks were under pressure, and Southbound provided hedging with domestic investors in

Emerging Markets (EM) Asian markets other than China have experienced large-scale foreign capital outflows. Last week alone, there was a net outflow of US$6.5 billion, led by Taiwan and South Korea. The cumulative net sales in the past three weeks were approximately US$44 billion.

At the same time, southbound capital inflows were strong at US$5 billion on a weekly basis, and domestic equity fund inflows in India rose 27% month-on-month to US$3.1 billion in June.

Capital outflows were highly concentrated in the technology sectors of South Korea and Taiwan, while domestic institutions bought approximately US$10 billion during the same period. This suggests that momentum factor unwinding dominated this round of foreign capital outflows, but local funds provided a significant hedge.

The current capital rotation and risk aversion in the market have been widely felt, but the correlation between the scale of foreign capital outflows and momentum unwinding, as well as the relative resilience of the Indian market performance, may not have been fully digested by the market.

One sentence conclusion: EM Asia is experiencing a significant game between foreign capital outflows and local capital inflows, and regional market differentiation has intensified. South Korean and Taiwanese technology stocks are facing momentum unwinding pressure, while southbound and Indian domestic capital has provided a cushion for relevant markets.

Good/bad: short-term bad for the Korean and Taiwan markets; good for southbound and Indian domestic investment targets. The trend of large outflows of foreign capital may not be over yet, but the resilience of local capital inflows is a key observation point. Catalysts:

1) The subsequent direction of earnings revisions for Taiwan and South Korea technology stocks;

2) Changes in Fed policy expectations affect capital flows;

3) Whether India's domestic economic data and reform progress can continue to attract domestic investment.

Full text

Foreign investors sold EM Asia for three consecutive weeks, South Korea and Taiwan technology stocks were under pressure, and Southbound provided hedging with domestic investors in

Emerging Markets (EM) Asian markets other than China have experienced large-scale foreign capital outflows.

Emerging Markets (EM) Asian markets other than China have experienced large-scale foreign capital outflows. Last week alone, there was a net outflow of US$6.5 billion, led by Taiwan and South Korea. The cumulative net sales in the past three weeks were approximately US$44 billion. At the same time, southbound capital inflows were strong at US$5 billion on a weekly basis, and domestic equity fund inflows in India rose 27% month-on-month to US$3.1 billion in June. Capital outflows were highly concentrated in the technology sectors of South Korea and Taiwan, while domestic institutions bought approximately US$10 billion during the same period. This suggests that momentum factor unwinding dominated this round of foreign capital outflows, but local funds provided a significant hedge. The current capital rotation and risk aversion in the market have been widely felt, but the correlation between the scale of foreign capital outflows and momentum unwinding, as well as the relative resilience of the Indian market performance, may not have been fully digested by the market. One sentence conclusion: EM Asia is experiencing a significant game between foreign capital outflows and local capital inflows, and regional market differentiation has intensified. South Korean and Taiwanese technology stocks are facing momentum unwinding pressure, while southbound and Indian domestic capital has provided a cushion for relevant markets. Good/bad: short-term bad for the Korean and Taiwan markets; good for southbound and Indian domestic investment targets. The trend of large outflows of foreign capital may not be over yet, but the resilience of local capital inflows is a key observation point. Catalysts: 1) The subsequent direction of earnings revisions for Taiwan and South Korea technology stocks; 2) Changes in Fed policy expectations affect capital flows; 3) Whether India's domestic economic data and reform progress can continue to attract domestic investment.

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