As of October 29, foreign investors in the Indian stock market have withdrawn more than US$17 billion this year, falling to a multi-year low, in sharp contrast to the net foreign capital inflow of US$20 billion in 2023. This also makes India the Asian market with the worst outflow of foreign portfolio funds.
On the other hand, the Korea Composite Stock Price Index (KOSPI) rose 1.8% on October 29 to close at a record high of 4081.15 points. JPMorgan raised its 12-month price target on Korea's Kospi to 5,000. South Korea's stock market has been called "the best performing stock market in the world" this year by the Financial Times.
Indian Stock Market:
U.S. policy on printing makes money leak severe
According to a report released by the Indian capital firm, global investors are withdrawing funds from India at an astonishing rate. Geographically, the largest withdrawal since July has been in U.S. funds ($1 billion), followed by Luxembourg ($7,56 billion) and Japan ($36.5 billion), indicating a widespread withdrawal of investors.
Central to this trend is reportedly a shift in global emerging market portfolios. India's allocation to global emerging markets funds has slipped to 16.7%, the lowest level since November 2023, compared with a peak of 21% in September 2024. Meanwhile, China's share soared to 28.8%, reflecting a strong pivot from active managers.
Analysts said that due to concerns about slowing profits in export-oriented industries and macro prospects, the outflow of foreign capital from the Indian stock market accelerated after the United States imposed tariffs. The imposition of tariffs harms portfolio flows, affects economic growth and widens India's trade deficit.
At the same time, the U.S. immigration department's adjustment of the H-1B temporary work visa application policy has significantly affected many Indian software and service outsourcing companies. Staffing costs and project scheduling have to be reassessed, causing India's important service export industry to face pressure. This policy change may be an important factor in the withdrawal of foreign investment from India.
According to the data, the profits of Indian companies in the MSCI index are expected to grow by 5% in 2025, down from 8% last year. Foreign capital outflows have spread to the foreign exchange market, pulling down the Indian rupee exchange rate and eroding the attractiveness of local assets.
Currently, India is stepping up reforms in the financial sector to stabilize foreign investment, which are aimed at easing access to foreign investment, expanding credit channels, and encouraging corporate lending to alleviate concerns about policies such as U.S. tariffs impacting the Indian economy.
Korean Stock Market:
The world's best-performing stock market under the semiconductor effect
Since the beginning of this year, the Korea Composite Stock Index (KOSPI) has risen by 68.5%, almost four times that of the S & P 500, ranking first among the world's 42 major stock indexes.
Some analysts believe that the rise in the South Korean stock market has benefited from multiple factors such as abundant global liquidity, the recovery of the semiconductor industry and the market reform implemented by the Lee Jae-myung government. In addition, since the Federal Reserve began cutting interest rates in September, global investors have reinvested funds in risky assets, driving a liquidity-driven rise.
Driven by demand for artificial intelligence, chipmakers remain at the heart of this rally. The direct catalyst for this craze is artificial intelligence (AI)-driven semiconductor demand, especially for high-bandwidth memory (HBM) products. Analysts believe that the sharp rise in the KOSPI index is largely due to the strong performance of its two major heavyweights, Samsung Electronics and SK Hynix, which together account for nearly 30% of the index's weight. Since the beginning of this year, Samsung's share price has risen by more than 90%, and SK Hynix's share price has tripled.
The latest data released by SK Healey showed that in September this year (third quarter) the company's operating profit reached 11.4 trillion won (approximately $80.2 billion), a record high of 62% growth. Healey said that the company's next year's chip production capacity has been sold out and plans to significantly increase investment; the company expects that under the drive of the AI boom, the chip industry will witness a continuing round of "super cycle".
In addition, in July this year, South Korea revised the Commercial Law to clarify the responsibilities of directors to shareholders. Currently, the government is preparing to cut dividend taxes, and the ruling party has also submitted a bill to compel companies to cancel their holdings. Analysts believe that these measures, once implemented, will be another catalyst for the rise of the Korean stock index, and will help end the problem of a minority of shareholders "abused" by large-scale holding shareholders who have long been haunted by the outside world. Expectations for these measures have pushed up the stock price of corporate groups and financial groups with large holdings.
Red Star journalist Wang Yalin Intern reporter Qing Ying Comprehensive Global Times and others
Editor is searching.
Audit by Lilly.