- Asia’s technology stocks rebounded after global equities posted steep losses in the previous session.
- Shares of Samsung Electronics rose over 9% after falling 12% in the previous session.
- KOSPI plunges nearly 10% on AI stock volatility, raising questions over stretched AI valuations.
- SK Hynix gained more than 4%, recovering part of the more than 12% decline posted by both respectively on Tuesday.
- Both chip giants are major constituents of the benchmark Index, which is up more than 3% after falling 10% in the previous session.
- Samsung SDI climbed 2.6%, while Seoul Semiconductor advanced 2.7%.
- Wedbush Securities’ Dan Ives said recent channel checks across Asia and enterprise AI demand trends showed “no cracks in the armor,” arguing that the selloff in South Korean technology stocks was more likely a pause after a near 100% rally in the Kospi this year, rather than a sign of weakening fundamentals.
- According to a recent note by Elara Securities, South Korea and Taiwan together now account for more than half of the MSCI Emerging Markets index, making emerging market allocations a play on the global AI supply chain.
- Experts say India has witnessed outflows as global investors rotated capital toward Taiwan and South Korea.
- Manish Bhandari believes that a single day's fall is not enough to indicate a complete reversal of capital flows.
- Bhandari suggests that if the market experiences two or three more days of decline, it may indicate a weakness in the AI trade.
- Ritesh Jain states that the focus is shifting from AI hardware and software to the beneficiaries of AI.
- Jain believes that earlier, money flowed into South Korea and Taiwan due to their undervaluation compared to India.
- Bhandari asserts that India's underperformance should be arrested due to improved fundamentals.
Asian technology stocks saw a rebound after a significant global selloff, with Samsung Electronics' shares rising over 9% following a 12% decline. The KOSPI index, however, plunged nearly 10% due to ongoing volatility in AI stocks.2348
Market analysts, including Dan Ives from Wedbush Securities, noted that recent checks across Asia indicated “no cracks in the armor” regarding enterprise AI demand. Ives suggested that the selloff in South Korean tech stocks might be a temporary pause after a nearly 100% rally in the KOSPI this year, rather than a sign of weakening fundamentals.1014
Despite the rebound, concerns linger over stretched AI valuations. A recent note from Elara Securities highlighted that South Korea and Taiwan now account for over half of the MSCI Emerging Markets index, making investments in these regions closely tied to the global AI supply chain.9
Experts noted that while India has seen capital outflows, the situation is improving. “I believe that earlier the money got sucked into South Korea and Taiwan as they looked undervalued compared with India,” one analyst stated, emphasizing that India's underperformance should be addressed as fundamentals improve.
The market remains cautious, with analysts warning that “if the bounce back doesn't come and they have two, three days more of fall, then it may be conclusive evidence of the weakness in the AI trade.”
“Asian technology stocks have rebounded following a global market downturn, with Samsung shares rising over 9%. Meanwhile, the KOSPI index has experienced a significant decline of nearly 10%, raising concerns about the AI trade.”
CNBC