Foreign investors are sharply cutting exposure to Asian equities, particularly technology stocks, as a global sell-off in high-growth tech names triggers a broad reassessment of risk across the Asia-Pacific region.
Market data shows that overseas investors withdrew about $9.79 billion from Asian markets in the first week of February 2026, eclipsing total outflows seen during the entire month of January. Technology-heavy markets such as South Korea and Taiwan were hit the hardest, with combined outflows estimated at $10.91 billion, as concerns intensified over ballooning capital expenditure linked to artificial intelligence investments.
Analysts say the retreat has been closely tied to weakness in major US technology stocks. Shares of Amazon fell more than 12 percent after the company flagged a sharp increase in capital spending next year, fuelling fears that returns on large-scale AI investments may take longer to materialise. The move prompted global investors to pare riskier positions, including exposure to Asian tech exporters and chipmakers.
India Stays With Record Net Inflows of $897 Million
Investor flows, however, have diverged across the region. India emerged as an outlier, recording net inflows of around $897 million, supported by renewed optimism after the easing of US tariff barriers on Indian exports. Elsewhere, Thailand, Indonesia and the Philippines saw modest inflows, while Vietnam bucked the regional trend with net outflows of roughly $236 million.
According to analysts at Nomura, the sell-off reflects broader concerns about global technology valuations rather than weaknesses unique to Asian economies. They noted that investors are increasingly favoring diversification and shifting capital toward sectors less exposed to sharp swings in AI-related spending and earnings expectations.
The episode underscores the growing sensitivity of Asia-Pacific equity markets to developments in the global technology cycle. As economies across the region push deeper into AI-led growth, investor strategy in the months ahead is likely to hinge on how companies balance innovation ambitions with profitability and capital discipline.
