Foreign investors returned to Asian equities in July for the third month in a row, with Taiwan attracting its biggest inflow in nearly two decades and Thailand breaking a nine-month streak of outflows. The upbeat momentum was fuelled by growing interest in artificial intelligence, improved trade ties with the United States, and easing tariff concerns.Investment flows into most Asian markets have stabilised over the past three months as governments across the region secured more favourable trade deals with Washington, reducing volatility and uncertainty that had rattled financial markets.Taiwan and South Korea emerged as top picks for overseas investors in July. According to LSEG data, Taiwan drew $7.78 billion in foreign funds, the highest monthly inflow since the 2008 global financial crisis, while South Korea saw $4.52 billion, its strongest since February 2024.The MSCI index tracking Asian equities excluding Japan rose 2% last month, marking its fifth straight month of gains. Stock benchmarks in Taipei and Seoul both climbed around 6%.Over the past three months, Taiwan and South Korea, both major tech exporters, have collectively attracted $25.7 billion, riding a wave of global investments into AI-related industries, Reuters reported.In South Korea, investor confidence was further supported by shareholder-friendly reforms, political stability, and strong corporate performance. However, fresh concerns around potential tax policy changes are beginning to raise caution among market participants.Thailand, meanwhile, saw foreign investors return after a prolonged exit, with net inflows of $499 million in July, the first since September last year. Bargain-hunting helped drive demand after months of heavy selling.Even so, the Thai market continues to face headwinds. Political uncertainty, weak macroeconomic indicators, and a strong currency that weighs on export competitiveness are dampening investor appetite for the longer term.Thailand’s benchmark SET index surged 14% in July, its best performance since November 2020. But the rebound wasn’t enough to offset earlier losses — the index is still down 10% this year, making it one of the region’s worst performers.“We are cautious and underweight on Thailand as it remains in a fairly precarious position: high household debt, limited government spending, an uncertain political environment, and external negative events such as the conflict with Cambodia,” said Kenneth Tang, senior portfolio manager at Nikko Asset Management. “If Thailand can settle these issues, it will clear up the path for its recovery,” Reuters cited Tang.Elsewhere in Asia, India witnessed sharp foreign outflows of over $2 billion in July, its largest monthly sell-off since February, ending a three-month streak of net buying. Indonesia and the Philippines also saw outflows of $570 million and $29 million, respectively.Vietnam, on the other hand, attracted $326 million in foreign funds in July, with investors encouraged by the country’s strong growth outlook and a favourable tariff arrangement recently secured with the United States.
