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Asian equities face heavy foreign selling as Middle East tensions and a sharp pullback in AI-linked technology stocks push global investors to reduce risk exposure, according to market data and analysts.
Foreign investors have pulled a net $27.08 billion from Asian regional equities so far in June, already surpassing May’s total outflows of $24.08 billion, based on LSEG data covering markets in South Korea, Taiwan, Thailand, India, Indonesia, Vietnam, and the Philippines.
The latest wave of selling comes as geopolitical uncertainty in the Middle East adds pressure to already fragile sentiment in global risk assets. At the same time, a cooling in high-flying technology shares, particularly those tied to artificial intelligence and semiconductors, has accelerated the shift out of regional equities.
The MSCI Asia Pacific Index recently touched a record high of 284.05 last week before reversing course. It has since fallen 4.34% in June, weighed down by weaker-than-expected second-quarter earnings from major tech players including chipmaker Broadcom and fresh fundraising plans from Meta, which added to concerns over near-term valuation levels in the sector.
Market participants say the pullback highlights how concentrated recent gains have been in a narrow group of AI and semiconductor stocks, making the broader market more vulnerable when sentiment shifts.
“The recent pullback highlights concentration risk in technology and AI-related stocks,” said Linh Tran, a market analyst at XS.com.
“These moves show that AI and semiconductor stocks remain a key pillar of market leadership, but also represent the biggest source of risk if growth expectations begin to be repriced,” Tran added.
Analysts note that while long-term structural demand for AI remains intact, near-term volatility is rising as investors reassess earnings momentum and geopolitical risk factors.
The combination of external shocks and sector-specific weakness is now driving a more cautious stance toward Asian equities, with fund flows reflecting a broader shift toward defensive positioning.
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