Asian markets rotate beyond semiconductors as AI stocks lose momentum

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Asia rotates beyond semiconductors

Semiconductor stocks bear the brunt of Asia's AI sell-off

According to Bloomberg, the sharp correction in AI-linked stocks has prompted global funds to rethink the structure of their Asian portfolios. Semiconductor makers have been among the hardest hit, including Samsung Electronics, SK Hynix and TSMC, all of which had previously benefited from the rapid expansion of AI infrastructure investment.

Pressure on the sector intensified after the U.S. midterm elections raised concerns about the future regulatory environment for the AI industry. On November 6, South Korea’s Kospi fell around 6%, while Hong Kong’s technology index declined 1.8%.

The selloff exposed the risks of having too much capital concentrated in a small group of technology companies. Fund managers are now reassessing which parts of the market offer a more attractive balance between valuation and growth potential.

India attracts $1.9 billion as Chinese stocks regain momentum

China and India have emerged as two of the main beneficiaries of the shift in sentiment. Over the past week, an index of Chinese companies listed in Hong Kong rose 5.2%, marking its strongest performance since March 2025. India’s Nifty 50 gained 8.6%, its best weekly advance since 2021.

Foreign capital has also started flowing back into Indian equities. According to Bloomberg, overseas investors invested around $1.9 billion in Indian stocks in the week through November 4.

Lower oil prices have provided another tailwind for India amid expectations that the U.S.-Iran conflict could ease. For one of the world’s largest oil importers, cheaper crude could reduce energy costs and help relieve inflationary pressure.

Healthcare, banks and consumer stocks return to the spotlight

The rotation is also reshaping sector preferences. Aberdeen Investments has highlighted India and Vietnam for their resilient domestic demand, while Lotus Asset Management is increasing its exposure to Hong Kong stocks.

Allianz Global Investors is looking at opportunities in healthcare and consumer sectors. In South Korea, investors are also turning their attention to cosmetics and food producers, while a possible easing in U.S. trade policy could support automakers including Toyota and Hyundai.

The idea of a broader rotation was already gaining traction before the latest selloff. Traders Union previously reported that Kotak Mahindra Bank founder Uday Kotak expected foreign capital to return to India if highly valued AI stocks underwent a correction.

Early signs of that reallocation are now visible. Fund managers are not abandoning technology altogether, however. The shift is more about reducing concentration risk and finding new sources of returns outside the semiconductor industry.

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