Foreign investment in Asian equities slowed in July amid increased market volatility and heavy selling in technology stocks, compounded by weak economic data and disappointing corporate earnings that dampened risk sentiment.

Fears of a second Trump presidency also sparked concerns that his administration might impose new tariffs on exports from the region, similar to measures taken during his previous term.

According to LSEG data, foreigners bought just $459 million worth of regional equities in July, down from $7.16 billion of inflows in the previous month.

"Global investors tend to reduce their emerging market portfolios during times of stress," said Jason Lui, the head of equity and derivative strategy for Asia Pacific at BNP Paribas.

"The recent headwind on AI/semiconductor stocks globally may also dampen the risk appetite on Korea and Taiwan equities in the near-term."

Taiwan stocks, previously bolstered by a global artificial intelligence (AI)-driven rally, saw their largest capital outflows in 10 months, totalling $4.74 billion, amid a selloff in global tech shares.

South Korean equities attracted $1.2 billion in inflows last month but faced $962 million in outflows during the first four trading days of this month, as concerns over a potential U.S. recession weighed on investor sentiment.

"Worries about growth in the U.S. are a negative for export-orientated markets like Japan, Taiwan and Korea; but relatively positive for domestically-oriented markets such as India, Indonesia and mainland China," said Prerna Garg, an equity strategist at HSBC.

Meanwhile, Indian equities attracted substantial attention, garnering a massive $3.87 billion in inflows last month.

"India remains a story of economic strength, with PMI data reflecting broad-based growth in both the manufacturing and services sector," said Yeap Jun Rong, a market strategist at IG.

Malcolm Dorson, a portfolio manager at Global X ETFs, said: "India is not only outperforming on the upside, but the past few days has shown its ability to show less downside through volatility as well."

India's benchmark Nifty index rose 3.92% in the last month, compared with MSCI Asia Pacific's 1.72% gains.

Meanwhile, Vietnam and Thai stocks witnessed $328 million and $42 million worth of outflows while the Philippines received $68 million in inflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)