AI selloff pushes investors toward China, India, and other Asian sectors

Investors are rotating away from artificial intelligence stocks into Chinese and Indian equities and other Asian sectors, following a selloff driven by valuation concerns and doubts about returns on massive AI infrastructure spending. The shift comes after sharp declines in semiconductor-heavy markets post-U.S. midterm elections, hitting firms like Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing. A Hong Kong index of mainland Chinese companies rose 5.2% last week, while India's Nifty 50 surged 8.6%, its best weekly gain since 2021, with $1.9 billion in net foreign purchases. Investors are also targeting Indian financials, drug manufacturers, and consumer firms, plus Vietnamese growth stories. In South Korea, attention has moved to cosmetics, entertainment, and retail, while LG Electronics and Japanese and Korean automakers benefit from potential tariff relief. Some still see AI dips as buying opportunities, but diversification is now favored.