Heavy selling hits Korea, Taiwan as global funds cut Asia AI risk

Global funds have offloaded nearly $4.6 billion each of Korean and Taiwanese equities so far in November, putting both markets on track for their largest monthly outflows since the spring.

The rotation gathered pace on Friday, Nov. 14, 2025, as Asia led a global risk-off session. Japan’s Nikkei fell around 1.8%, Korea’s Kospi slid more than 3%, and Hong Kong’s Hang Seng dropped about 1.9%, tracking a U.S. tech retreat tied to doubts over the pace of AI-related profits and a dimmer outlook for rate cuts. The dollar was mixed and U.S. Treasury yields eased as investors trimmed risk, while gold firmed.

Across Asia ex-Japan Index, foreigners yanked roughly $10.2 billion in the first half of November, reversing October’s net buying; Korea and Taiwan absorbed the bulk at about $5.1 billion and $3.9 billion, respectively. The MSCI Asia ex-Japan information technology index fell more than 4% last week after surging over 60% in the prior six months, highlighting how quickly momentum can unwind when positioning is crowded. 

The driver is a mismatch between price and delivery. After a year of rapid gains for chipmakers, foundries and AI supply-chain names, guidance has turned more cautious in several sub-sectors, and investors are questioning whether 2026 demand will absorb capacity expansions at the pace implied by share prices. That skepticism showed up first in fund flows and then in indices, with Asia bearing the brunt given its heavier concentration in memory, foundry and advanced packaging — even as the largest U.S. AI platforms have, for now, proven relatively steadier on days when Asia sells off.

The contrast with U.S. AI mega-caps matters because it frames this as an Asia-specific reality check rather than a universal rejection of the theme. Fows show foreigners targeting the most AI-levered Asian markets — Korea and Taiwan — at the sharpest pace in at least seven months, while the U.S. cohort remains supported by deeper liquidity, broader index ownership and diversified earnings bases. That gap helps explain why Asia’s pullback has been more abrupt, even though the narrative catalyst — questioning earnings delivery versus valuation — is shared.

For now, the tape reads like a classic de-risking day led by Asia: equities lower across key AI hubs, government bonds bid at the margin, and commodity havens steadier. Whether the pullback marks a deeper rerating or a reset before year-end depends on two things investors say they need to see: firmer evidence that 2026 AI earnings can meet current multiples, and stabilization in foreign flow data out of Korea and Taiwan. Until then, the path of least resistance remains choppy, with Asia’s AI leaders taking the brunt of valuation discipline while U.S. giants provide the benchmark for resilience.