Foreign investors pull $137B from Asian stocks in record H1 exodus

Foreign investors withdrew a net $137.36 billion from Asian equities in the first half of 2026, the fastest six-month outflow in data going back to 2010, as a powerful AI-driven rally in chipmakers forced global funds to trim concentrated positions in South Korea and Taiwan.

Rebalancing, Not Retreat

The outflows, reported by Reuters citing LSEG data, were heaviest in South Korea, which shed $70.8 billion, and Taiwan, which lost $29.6 billion over the period. The selling came even as the Kospi nearly doubled and Taiwan's TAIEX rose sharply, with gains driven by mega-cap semiconductor names TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 1.49%, Samsung Electronics, and SK Hynix.reuters

The head of South Korea's stock exchange told CNBC in June that the selling was "a rebalancing exercise and is unrelated to any diminished confidence in the Korean market," noting the Kospi had risen more than 108% year-to-date before a pullback began in early June. In June alone, foreign investors sold $27.08 billion of regional equities, including $12.63 billion from South Korea.cnbc+1

Banks Tighten the Screws

The retreat was amplified by global banks restricting leveraged bets on the rallying chip stocks. Citigroup ↘ 1.54%, JPMorgan ↘ 1.47%, and Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.75% raised financing costs for hedge funds seeking bullish swap positions in SK Hynix and Samsung Electronics, Bloomberg reported in mid-June. Bank of America, BNP Paribas, and UBS ↘ 1.07% also increased costs and limited swap volumes for the two stocks.stockopedia+1

Korean chip stocks extended their decline on Wednesday as foreign brokerages remained among the largest net sellers on the Korea Exchange.

BlackRock Adds to Caution

BlackRock ↘ 1.67%, the world's largest asset manager, added to the bearish signal on Monday when its Investment Institute downgraded emerging-market equities to neutral from overweight for the next six to 12 months, citing AI concentration risks in its 2026 mid-year global outlook. The firm pointed specifically to heavy exposure in markets like South Korea and Taiwan to AI-related companies.finance.yahoo+1

The downgrade came as emerging-market stocks recorded their steepest weekly loss since early March, pressured by a tech selloff and expectations of a more hawkish Federal Reserve.finance.yahoo