A sharp sell-off in tech stocks, particularly semiconductors, is being driven by lofty expectations, profit-taking, and macroeconomic factors. Despite the correction, the underlying belief is that the AI rally is supported by strong earnings growth, unlike the dot-com era.
The military conflict between Iran and Israel is directly impacting global energy markets, with rising crude oil prices fueling inflation. This creates a difficult environment for Asian central banks, particularly in Japan and South Korea, which are already seen as behind the curve on monetary policy.
The Asian market rally, especially in South Korea, is characterized by high levels of leverage, including record margin debt by retail investors and large rebalancing flows from leveraged ETFs. This market structure amplifies both gains and losses, making the region susceptible to sharp, technically-driven corrections.
Major upcoming US IPOs for companies like SpaceX, OpenAI, and Anthropic are poised to attract significant global capital, potentially causing outflows from Asian markets. Simultaneously, major Chinese memory chip makers are planning domestic IPOs, highlighting a bifurcating global tech landscape shaped by US restrictions.
Investment strategists are becoming more selective across Asia. While bullish on the long-term AI theme in Korea and Taiwan, there is caution towards markets like India (due to high valuations), the Philippines, and Indonesia (due to political and oil price risks).
Keep pulling the thread on Nasdaq 100.