Foreign investors have returned to Taiwan’s stock market after July’s global technology selloff, with Bloomberg data showing they turned into net buyers last week and have accumulated $1.7 billion in net purchases so far in August. The move follows six straight weeks of net selling and came alongside two consecutive days of foreign buying in Taiwan shares.
South Korea moved the other way. Over the same period, foreign investors were net sellers of Korean equities to the tune of $6.2 billion, highlighting a split in how institutional money is being redeployed across Asia’s two major AI-driven markets.
Taiwan’s yearly gain moves ahead of the Kospi
South Korea’s Kospi had been one of Asia’s best-performing markets this year, but that lead has now slipped. Taiwan’s benchmark index has risen 54% year to date, topping the Kospi’s 52%.
ABMedia said investors have increasingly viewed Taiwan as a steadier market. The report contrasted that with Korea’s tendency for sharper rallies and noted Taiwan’s lower dependence on leveraged trading.
Managers point to supply chain breadth and earnings quality
Warren Chiang, a fund manager at GMO, said: 「The quality of Taiwanese companies is very, very high. Taiwan stocks may move with the global economic cycle, but from a fundamentals perspective, this is by no means a market with excessively high risk.」
He added that Samsung Electronics and SK Hynix are more concentrated in highly cyclical flash memory, while Taiwan holds a broader position across the technology hardware supply chain. 「From your iPhone to all kinds of devices, almost every component comes from Taiwan,」 he said.
That view is also reflected in earnings revisions. Bloomberg data showed analysts have raised 12-month earnings-per-share forecasts for Taiwan equities by 9.5%, above the 7.4% revision for Korean stocks. It was the first time in roughly a year that Taiwan’s earnings upgrade pace exceeded Korea’s.
Frank Benzimra, an equity strategist at Societe Generale, said Taiwan’s market is anchored by foundry leaders such as Taiwan Semiconductor Manufacturing Co. (TSMC), whose profit cycles are less volatile than those of typical memory makers.
Leverage remains a pressure point for Korean equities
On the Korean side, the report pointed to heavy leverage as a source of instability, especially the popularity of single-stock leveraged exchange-traded funds.
Hebe Chen, senior market analyst at Vantage Global Prime, said: 「The South Korean stock market carries a large amount of leveraged and speculative positioning. So even a small shake in market expectations, without any material deterioration in fundamentals, can trigger an exaggerated price plunge.」
Korean valuation discount draws attention again
Korean stocks have not lost their appeal entirely. After the sharp pullback in July, the Kospi’s valuation discount relative to Taiwan has widened to what the report described as a historic level.
Isaac Thong, Aberdeen’s Asia income fund manager, said: 「Given current valuations, Korean stocks look quite attractive, because Taiwan did not pull back as much in this round of correction.」
AI monetization stays at the center
Asian technology shares staged a mild rebound last week, but the report said it remains unclear whether the recent flow from Korea into Taiwan can last while the effects of July’s selloff are still being felt.
Benzimra said the long-term issue is AI monetization. 「The core long-term question is whether AI monetization can turn massive research and development capital spending into actual profits. That is the longest-term risk facing global investors,」 he said.