(April 10): As tensions in the Middle East begin to ease, global investors are turning their attention back to the artificial intelligence trade, funnelling fresh funds into Asian tech stocks after weeks of selling.
Tech-heavy Taiwan and South Korea equities have received a combined US$7.9 billion in net foreign buying this week, data compiled by Bloomberg show, snapping more than a month of outflows.
While the inflows are still modest after a record US$70 billion withdrawal in March, it shows some investors are rotating back to growth stocks despite lingering geopolitical risks. Signs of positive earnings momentum are also adding to the optimism. Samsung Electronics Co blew past expectations with an eightfold jump in quarterly profit this week, reinforcing the AI-driven demand boom.
“Investors believe the war is ending so the key trade of Asian AI picks and shovels is coming back,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “Beyond that, Samsung’s strong earnings this week” also underscored the optimism we have been seeing in profit estimates, he added.
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To be sure, concerns about the durability of the AI-driven rally still linger. Optimism remains fragile amid fears that capex may be peaking as energy costs rise, with Jefferies Financial Group Inc turning more underweight on Korea. Also the picture of foreign flows is uneven across Asia with Indian equities continuing to face selling. The South Asian nation, which lacks major AI companies, saw outflows reach US$17.8 billion over record 23 straight sessions through April 7, putting it on the cusp of surpassing last year’s record.
Global funds bought Taiwanese stocks worth US$5.2 billion so far this week, on course to mark their third biggest weekly purchase on record, according to data compiled by Bloomberg. South Korean shares have seen US$2.7 billion in net inflows. Japan — home to chip equipment stocks such as Tokyo Electron Ltd — also attracted around US$12 billion in foriegn inflows in the first week of April.
Since the start of the year, the 12-month forward estimates for Korea’s benchmark index have surged about 70%, compared with a 17% gain for Taiwan’s gauge and a 9% increase for the MSCI World Index, according to Bloomberg-compiled data.
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As a result, shares of sector bellwether Taiwan Semiconductor Manufacturing Co, which reports results next week, are close to reaching a record high after rising about 10% this week. Samsung Electronics and SK Hynix Inc have climbed 11% and 17%, respectively.
Uploaded by Evelyn Chan
