Foreigners sell Asian equities in December on worries over valuations

By Gaurav Dogra

Jan 16 (Reuters) - Foreign investors net sold Asian equities in December on lingering concerns about elevated valuations in technology stocks along with some year-end profit-taking, though relatively modest outflows compared to November, suggested some recovery in sentiment.

Investors sold local stocks worth a net $1.22 billion in India, Taiwan, South Korea, Thailand, Indonesia, Vietnam and the Philippines last month, sharply down from $22.1 billion of net selling in November, LSEG data showed.

In the last month, foreigners divested a net $1.9 billion in Taiwan stocks for a third straight monthly net sale.

"After a strong rally in AI stocks, especially in Korea and Taiwan where markets are now crowded and valuations stretched, it may be wise for investors to diversify," said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC.

Indian stocks registered a net $2.52 billion cross-border outflow, the largest in three months, as consumption softened, while investors remained concerned over a lack of progress in striking a U.S.-India trade deal.

Philippine stocks also faced a net $210 million worth of foreign outflows last month.

Foreigners, meanwhile, snapped up $2.41 billion, $732 million, $196 million and $63 million of South Korean, Indonesian, Thai and Vietnamese stocks respectively last month.

Jason Lui, the head of APAC equity and derivative strategy at BNP Paribas, said investors added more Korean equities due to the sharp rise in memory and storage pricing as the Korean tech companies have a dominant market share in these products.

Including foreign selling in December, regional equities saw net outflows of $49.4 billion last year, the largest since about $58.6 billion in 2022, as uncertainty over U.S. tariffs on countries in the region weighed on investor sentiment.