By Gaurav Dogra
(Reuters) – Foreign investors poured into Asian stocks in June after two months of selling, as easing price pressures in the United States raised hopes the Federal Reserve could cut interest rates this year.
Market optimism was further bolstered by the rise of global AI-related companies, boosting demand for technology and semiconductor exports from Asia.
According to stock market data from South Korea, India, Taiwan, Indonesia, Vietnam, Thailand and the Philippines, foreign investors bought a net $7.16 billion worth of regional stocks.
U.S. inflation held steady in May, in line with economists’ forecasts, a Commerce Department report said last week. Fed Chairman Jerome Powell said Tuesday that the United States was back on a “disinflationary path,” reinforcing expectations of rate cuts ahead.
Technology exporters South Korea and Taiwan recorded foreign purchases on stock markets last month worth $3.83 billion and $1.94 billion, respectively.
“Both South Korea and Taiwan have been major beneficiaries of increased investment in AI,” said Yeap Jun Rong, market strategist at IG.
Powered by the global tech rally, the MSCI Asia Pacific IT Index rose nearly 10% in June, marking its best performance in seven months.
Indian markets attracted $3.19 billion of foreign funds, in sharp contrast to the previous month’s net sale of $3.06 billion.
“After a (very short-lived) panic sell-off after the elections, Indian stocks quickly resumed their upward trend as investors saw policy continuity with the new government,” said Minyue Liu, investment specialist at BNP Paribas Asset Management.
“We believe the Indian economy is on the cusp of a multi-year economic growth cycle supported by production-linked incentive (PLI) schemes, favourable demographic structure and strong FDI.”
However, stock markets in Thailand, Vietnam, the Philippines and Indonesia faced net capital outflows of $936 million, $658 million, $104 million and $91 million, respectively.
“We remain constructive on the outlook for Asian equities,” said Liu of BNP Paribas.
“Most regional central bank rate hike cycles appear to have reached an inflection point, which would be positive for Asian equities.”
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips)
