Sept 4 (Reuters) - Overseas investors aggressively

withdrew from Asian tech stocks in August, as they turned pricey

after their recent rally and doubts emerged about the

profitability of AI investments.

According to LSEG data, foreigners sold a net $3.8 billion

worth of regional shares in South Korea, India, Taiwan,

Indonesia, Vietnam, Thailand, and the Philippines last month,

after two months of net purchases in a row.

"The month (August) has seen the outperforming tech sector

trailing behind the rest in terms of performance, seemingly with

some rotation in place towards the laggards as market

participants digest lofty tech valuation and look towards

upcoming Fed's rate easing," Yeap Jun Rong, a market strategist

at IG, said.

Taiwanese and South Korean equities, which include many

companies that manufacture chips for AI applications,

experienced outflows of $4.2 billion and $2.1 billion

respectively in the last month.

Jason Lui, head of APAC equity and derivative strategy at

BNP Paribas, attributed the foreign outflows in Taiwan and Korea

to a reassessment of sentiment on semiconductors and AI.

"Global investors are starting to question the profitability

and sustainability of large capital spending by leading tech

companies in the U.S.," he said.

Indian markets managed a net inflow of $873 million. Most of

the buying was driven by new issues in the primary market,

however, and foreigners sold stocks traded on exchanges worth a

net $662 million worth.

"Foreigners have been reducing exposure to India because

they feel it's expensive," said Herald van der Linde, head of

equity strategy, Asia Pacific at HSBC.

Indian stocks trade at a 12-month price-to-earnings ratio of

about 24.06, the highest among major global markets, as per LSEG

data.

Foreigners, meanwhile, pulled out of Vietnam stocks for a

seventh month running, with about $151 million in net sales last

month. They also shed Thai equities of $175 million.

Bucking the trend, Indonesian and Philippine equities

attracted about $1.85 billion and $144 million worth of foreign

inflows respectively last month.