As the intense AI rally burned out and investors were wary due to a robust US jobs report and a resurrected conflict in West Asia, Korea’s benchmark stock market, KOSPI, fell more than 8%.
Heavyweights including Samsung Electronics and SK Hynix plummeted 10.2% and 7.7%, respectively, as the benchmark index dropped as much as 9% intraday. Following Broadcom’s disappointing year-end guidance last week, the tech share selloff persisted.
The AI chip stocks had touched record highs as investors became confident of the success of the widespread adoption of artificial intelligence even as AI companies announced massive capital expenditure to ramp up their compute capacity.
Samsung and SK Hynix, the Korean chip titan, were the favoured bets for investors as poured billions of dollars in these stocks catapulting them into the trillion-dollar club. That rally seems to have now taken a breather as investors take adopt a wait and watch mode.
Just how important the two semiconductor stocks are can be gauged by the fact that both account for more than half of the benchmark on the back of a spectacular rally this year.
The Nasdaq had closed more than 4 per cent on Friday as a strong US jobs report raised bets that the Federal Reserve won’t cut the interest rates.
Almost all the big tech names in Asia were down on Monday. Taiwan Semiconductor Manufacturing Co, or TSMC, was down 2.96%, while Hon Hai Precision, also known as Foxconn, fell 5.27%. Japan’s Softbank plunged 6.1%, while Tokyo Electron and Advantest were down 7.45% and 5.72%, respectively.
Broader Asian indices were down as an escalation in West Asia triggered fears among investors of a renewed conflict and a prolonged closure of the critical Strait of Hormuz. Energy prices are already high driving the consumer sentiment in the US to record lows. A protracted conflict could ignite inflation fears and dash hopes of a rate cut even as the new Federal Reserve chief prepares for his maiden policy announcement.
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Syed Ziyauddin is a media and international relations enthusiast with a strong academic and professional foundation. He holds a Bachelor’s degree in Mass Media from Jamia Millia Islamia and a Master’s in International Relations (West Asia) from the same institution.
He has work with organizations like ANN Media, TV9 Bharatvarsh, NDTV and Centre for Discourse, Fusion, and Analysis (CDFA) his core interest includes Tech, Auto and global affairs.
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