*

Taiwan and South Korea attract $25.7 billion in foreign

investments over three months

*

Thailand sees first foreign inflows since September,

despite

political and economic challenges

*

India, Indonesia, Philippines face outflows; Vietnam

attracts

$326 million in July

By Sameer Manekar and Gaurav Dogra

Aug 6 (Reuters) - Foreign investors flocked to Asian

stocks for the third straight month in July, with inflows into

Taiwan hitting a near two-decade high and Thailand snapping its

nine-month losing streak, buoyed by growth and AI prospects as

trade worries fluctuate.

Foreign inflows into most Asian equity markets have

stabilised over the past three months as countries clinched

better trade arrangements with the United States, calming

tariff-related volatility and uncertainty in financial markets.

Overseas investors showed strong interest in Taiwan and

South Korea for the third straight month in July, pouring $7.78

billion in Taiwan, the highest since the 2008 global financial

crisis, and $4.52 billion in South Korea, the most since

February last year, LSEG data showed.

The MSCI gauge of equities in Asia excluding Japan

rose 2% last month, its fifth consecutive month

in green, while benchmarks in Taipei and Seoul

advanced roughly 6% each.

Taiwan and South Korea were the top destinations in the

region for foreign capital, securing a cumulative $25.7 billion

over the past three months as the two dominant Asian tech

exporters benefit from a global surge in AI-related investments.

South Korea's shareholder-friendly reforms, political stability,

and robust corporate fundamentals lured investors in 2025 after

a dreary performance last year, though recent concerns over

reforms to tax policy are posing new challenges.

Foreign investors also net bought $499 million worth of Thai

equities in July, the first month of inflows since September

last year, as they scooped up stocks at relatively cheap

valuations after a prolonged period of heavy selling.

Even so, Thailand's uncertain political climate, challenging

macroeconomic conditions, and an unnecessarily strong currency

that undermines export competitiveness continue to impede any

buildup of positions on these equities.

Thailand's benchmark SET index surged 14% in July -

its best month since November 2020 - but still not enough to

erase steep losses suffered earlier in the year. The index

remains 10% in the red, ranking among the region's worst

performers.

"We are cautious and underweight on Thailand as it remains

in a fairly precarious position: high household debt, limited

government spending, an uncertain political environment, and

external negative events such as the conflict with Cambodia,"

said Kenneth Tang, senior portfolio manager at Nikko Asset

Management.

"If Thailand can settle these issues, it will clear up the

path for its recovery."

Indian stocks experienced sharp outflows of over $2 billion

in July, the highest since February this year and snapping a

three-month streak of net purchases.

Indonesia and the Philippines also logged net outflows of

$570 million and $29 million, respectively, last month, while

Vietnam attracted $326 million as investors bet on the country's

strong growth prospects after it secured a comfortable tariff

rate with the United States.