Taiwanese stocks are gaining favor over South Korea’s on steadier earnings prospects, as the two artificial intelligence (AI)-bellwether markets look to recover from last month’s rout.Foreign investors turned net buyers of Taiwanese stocks last week, ending a six-week selling streak, data compiled by Bloomberg showed. They have accumulated US$1.7 billion so far this month, while net selling US$6.2 billion from South Korea over the same period.The flows suggest that as investors consider a return to AI stocks amid doubts about companies’ spending payoffs, they might opt more for markets they consider less volatile and more diversified. Some investors view Taiwan as less likely to deliver the spectacular surges seen in South Korea but as offering more even-keeled returns and less dependent on leveraged trades.
A person looks at the Taiwan Stock Market graph inside the Taiwan Stock Exchange office in Taipei on June 15.
Taiwanese “companies are very, very high quality,” Grantham Mayo Van Otterloo & Co portfolio manager Warren Chiang said. The market “will obviously move with the business of the world economy, but certainly it is not excessively risky from a fundamental sense.”After steadily beating Taiwan as Asia’s best-performing market for the year, South Korea recently conceded that title, although both are up more than 50 percent.
