AI stock selloff pushes investors toward China, India, and overlooked Asian sectors

Investors are rotating from AI stocks into Chinese, Indian, and less tech-dependent Asian sectors amid concerns over valuations and returns on massive infrastructure spending. The shift follows a sharp decline in semiconductor-heavy markets after the US midterm elections, with Samsung Electronics, SK Hynix, and Taiwan Semiconductor facing selling pressure. A Hong Kong index tracking mainland Chinese firms rose 5.2% last week, while India's Nifty 50 jumped 8.6%, its best weekly gain since 2021, with net foreign purchases of $1.9 billion. Asset managers now favor domestic growth opportunities like Indian financials, drug manufacturers, and consumer firms, while also eyeing Vietnamese prospects and South Korean cosmetics, entertainment, and retail companies. Some investors still view the AI downturn as a buying opportunity, but the immediate trend favors diversification into businesses with alternative earnings drivers.