Asian Technology Stocks: After Months Of Record-Breaking Rallies That Turned South Korea And Taiwan Into The World’s Largest AI Hardware Proxies, Friday’s Correction Raises The Question Every Bull Has Been Avoiding: How Much Of The Gain Is Structural And How Much Is Momentum?
According to CNBC, Samsung Electronics fell nearly 7% while SK Hynix dropped more than 8% in Friday trading. Other South Korean tech names also came under pressure. Samsung SDI fell over 7%, LG Display dropped 7.4%, LG Innotek lost 6.1%, and Seoul Semiconductor slid more than 6%.
In Japan, Tokyo Electron and Advantest dropped over 6% and 5% respectively, while Murata Manufacturing fell 4.8% and Fanuc lost 4.1%. In Taiwan, Apple supplier Hon Hai Precision declined 1.7%, Pegatron fell 2.6%, and Largan Precision lost over 4%. TSMC, however, bucked the broader trend to edge 0.4% higher. The broader decline followed a sell-off in US markets.
The scale of Friday’s decline reflects the concentration risk that has built up across the region’s benchmark indices. TSMC alone now accounts for more than 40% of Taiwan’s market capitalisation, while Samsung Electronics and SK Hynix together make up a record 42.2% of South Korea’s KOSPI index. South Korea’s KOSPI has surged more than 80% this year, hitting fresh highs repeatedly as investors piled into the semiconductor trade at the centre of the AI boom.
William de Gale of BlueBox Asset Management has warned that the memory industry tends to have “enormous ups and downs,” and that “in the long run it’s a pretty dreadful industry.” Steve Brice of Standard Chartered earlier told CNBC he believes peak optimism around Korean equities “is not too far around the corner.”
To check out our previous coverage on Asian markets and AI chip stocks, read our articles here.
