Global investors are increasingly turning away from the Australian sharemarket, favouring North Asian markets driven by the artificial intelligence revolution and significant corporate governance reforms. This shift sees investments flowing into countries like South Korea and Taiwan, marking a change from broad regional bets to specific exposure to chipmakers and robotics. Equity strategists attribute this interest to the ‘AI super cycle’, creating substantial demand for chips powering digital technologies. Global X reported accelerated buying momentum into Asia towards the end of last year. ASX-listed Asian equity exchange-traded funds hit a record $715 million in inflows in 2025, with $320 million occurring in the fourth quarter alone.
South Korea’s KOSPI Index has become a primary destination for global investors, boosted by corporate reforms enhancing transparency and investor returns. JPMorgan’s head of Australian research, Jason Steed, considers South Korea the best investment location currently. The KOSPI soared 76 per cent in 2025, significantly outperforming the S&P 500’s 16.4 per cent rally and Australia’s S&P/ASX 200 Index’s 7 per cent return. Samsung and SK Hynix have both seen their market value more than double over the past year.
Taiwan is also experiencing optimism, largely due to the Taiwan Manufacturing Company (TSMC)’s strong performance, comprising half of the nation’s stock market. Japan is regaining favour due to corporate reform and the central bank’s move to raise interest rates after years of stagnation. Schroders’ head of multi-asset, Sebastien Mullins, notes Japan, Taiwan, Korea and China as preferred markets, driven by valuations, structural reforms, the AI theme, and strong earnings outlooks.
Conversely, Australia is seeing cooled investor sentiment due to high prices, sluggish economic growth, and increasing borrowing costs. Bank of America research analyst Winnie Wu points to solid earnings growth but stretched valuations as key issues for the Australian sharemarket.
