June 10 (Reuters) - Asian equities are witnessing a surge in foreign outflows in June as escalating Middle East hostilities and a pullback in AI-linked technology stocks following underwhelming results by Broadcom, prompt investors to trim exposure.
Foreign investors have withdrawn a net $27.08 billion from regional stocks so far this month, exceeding the combined net outflow of $24.08 billion in May, LSEG data covering exchanges in South Korea, Taiwan, Thailand, India, Indonesia, Vietnam and the Philippines
showed.
The MSCI Asia Pacific Index hit a record 284.05 last week but lower-than-anticipated second-quarter earnings from chipmaker Broadcom and Meta's fundraising plans pressured the hot technology sector. The index is down 4.34% so far this month.
"The recent pullback highlights concentration risk in technology and AI-related stocks," said Linh Tran, a market analyst at XS.com.
"These moves show that AI and semiconductor stocks remain a key pillar of market leadership, but also represent the biggest source of risk if growth expectations begin to be repriced," XS.com's Tran said.
South Korea and Taiwan - regional AI-hardware and chip exporters - lead the outflows, with a net $12.63 billion and $8 billion of foreign sales so far this month. Foreigners sold $27.88 billion of South Korean stocks but bought $8 billion of Taiwan shares in May.
Indian equities have also seen net foreign outflows of $5.91 billion this month, compared with $3.45 billion of selling in May.
The Reserve Bank of India held its benchmark interest rate steady last week but cut growth forecasts to 6.6% from 6.9% and raised core inflation projections to 4.7% from 4.4% for the current fiscal year.
Elsewhere, foreigners sold Indonesian and Philippine stocks worth $571 million and $29 million, but bought Thai and Vietnamese stocks of $55 million and $5 million, respectively.
"Despite renewed anxiety over rates, equity issuance, and geopolitics, we expect the rally to resume," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
"Although tech stocks have come under pressure in recent days amid concerns about whether expectations can be met, business fundamentals remain strong."
(Reporting by Gaurav Dogra, Editing by Louise Heavens)
