Japanese investors sold a net ¥2.72 trillion (about $17.0 billion) of foreign equities in May, marking the largest monthly outflow since April 2021. Investors cited rising Middle East tensions and concerns that the technology-driven market rally had become overextended.
At the same time, Japanese investors bought a net ¥2.9 trillion (about $18.1 billion) of foreign bonds, the biggest monthly purchase since May 2025, showing a shift toward safer assets.
In South Korea, retail investors sold more than 1 trillion won of overseas stocks during the first week of June. Korea Securities Depository data showed net overseas equity sales of $793.67 million during the week.
The selling trend has continued since April, when investors sold a net $469 million of overseas equities. Net sales accelerated to a record $939.77 million in May. If the trend continues, June would mark the third straight month of net selling, the first such streak since April–July 2023.
Asian markets extended last week’s losses on Monday, with South Korea’s KOSPI dropping more than 8%. Semiconductor stocks led the decline as investors reduced positions in some of the market’s biggest winners.
Analysts said the weakness was triggered by a sharp selloff in US technology stocks. Concerns over the AI trade weighed on Asian tech shares, while a weaker Korean won and the possibility of tighter South Korean monetary policy added pressure on leveraged positions.
Despite the selloff, investors and fund managers said the move appears driven mainly by profit-taking, position unwinding, and momentum selling rather than any deterioration in the long-term AI growth story. They noted that spending on AI infrastructure remains strong and there are currently no signs of a slowdown in AI investment.
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