SINGAPORE, June 8 (Reuters) – Asian markets extended last week’s bruising selloff with high-flying semiconductor stocks taking the heaviest beating and South Korea’s KOSPI sinking more than 4.5%.
U.S. markets fell sharply on Friday when strong jobs data lifted the odds of a rate hike this year and sent investors scurrying from some of the year’s top-performing bets.
Here is what market participants are saying about the moves:
ECATERINA BIGOS, CHIEF INVESTMENT OFFICER FOR ASIA EX-JAPAN CORE INVESTMENTS, BNP PARIBAS ASSET MANAGEMENT, HONG KONG:
“Investors are reassessing valuations and recalibrating their positions rather than abandoning the AI theme altogether.
After an extended run, corrections are typical, serving as a pause before further advances, especially when underlying structural factors remain supportive.
For emerging markets like South Korea and Taiwan, structural tailwinds – namely persistent memory chip shortages and high demand from data centres and AI infrastructure – offer resilience, with longer-term prospects still intact if supply-demand dynamics hold steady.”
DAVID CHAO, GLOBAL MARKET STRATEGIST FOR ASIA-PACIFIC, INVESCO, SINGAPORE:
“Asian tech stocks are off to a turbulent start of the week following a selloff that started in the U.S. after a large U.S. semiconductor company missed revenue expectations and provided no upgrade to AI guidance. Asia tech stocks are directly linked to the U.S. semiconductor cycle – as they share the same supply chain and investor positioning.
But I don’t think that one company’s quarterly earnings report signals an oncoming industry trend. It’s just that market expectations have become too high for AI guidance to be continuously raised.
In Asia, the AI investment narrative has become quite concentrated. It is driven by a few names in Korea and Taiwan.
These concentration risks have led to the market becoming far more fragile. Thus, when one company disappoints or there is disruption to demand or supply, we see outsized market volatility.”
VASU MENON, MANAGING DIRECTOR OF INVESTMENT STRATEGY, OCBC, SINGAPORE:
“While the long-term outlook for the AI-driven equity rally remains positive, the sharp pullback in tech stocks on Wall Street and Asia is a reminder that markets can be volatile after exceptional gains and a healthy correction may be in order after outsized returns in May. It calls for some degree of caution in the near term, as uncertainties around inflation, rising U.S. Treasury yields, and the Fed’s direction under its new Chair Kevin Warsh could trigger further short-term market swings.
SpaceX and Anthropic IPOs with aggressive valuation targets have also raised short-term concerns and led investors to questioning whether the high premiums assigned to AI and tech stocks are justified and if these mega IPOs will suck liquidity away from other tech companies.
Eventually, however, their listings could support the long-term case for AI as a key investment theme not to be ignored.”
BEN BENNETT, HEAD OF INVESTMENT STRATEGY FOR ASIA, L&G ASSET MANAGEMENT, HONG KONG:
“I’m not surprised we’re getting a correction given how big the recent rally has been. Our asset allocation team took out their tactical technology overweight in the middle of May as we thought a lot of good news was already priced in.
I’ve seen several triggers for the correction, higher rates, upcoming IPOs, etc., but I don’t think anything has fundamentally changed. We’re still structurally positive on technology, so there could be a re-entry point in the future.”
FRANK BENZIMRA, HEAD OF ASIA EQUITY STRATEGY, SOCIETE GENERALE, HONG KONG:
“What you see is some extreme sensitivity of the market to earnings, because what has made this market rise so much … is the fact that the earnings have been constantly revised upwards. So when you start to see some doubt on this positive earnings momentum … you see the market becoming very, very nervous.
“You have some leveraged ETFs which have been bought and by nature of the function of those structures, it is amplifying the decline … so this is creating volatility.”
THOMAS MATHEWS, HEAD OF MARKETS FOR ASIA-PACIFIC, CAPITAL ECONOMICS:
“The weaker-than-expected Broadcom result late last week has probably brought back a few of investors’ nerves around the AI trade. The U.S. labour market data and associated shift in Fed expectations wouldn’t have helped much, either. But the bigger picture is that semiconductor companies are still making lots of money and the broader economy is strong, which isn’t typically a backdrop for a sustained drawdown.”
FABIEN YIP, MARKET ANALYST, IG, SYDNEY:
“The sharp declines have been triggered by the large correction concentrated in tech last Friday in the U.S. If the optimism on the AI trade fades, it will have a toll on the picks and shovels companies in Asia. Further, the weak won and potential tightening from South Korea may potentially add strain for the leveraged positions.
“A correction following a sustained advance can be healthy for the market – for now corporate fundamentals remain solid. Risks linger, however: forced unwinding of leveraged positions could amplify near-term volatility, while upcoming inflation prints may push bond yields higher, applying additional pressure on growth stock valuations.”
MARC VELAN, HEAD OF INVESTMENTS, LUCERNE ASSET MANAGEMENT, SINGAPORE:
“The move looks more like a positioning and momentum unwind than a reassessment of the long-term AI story. Korean technology names have been among the strongest performers globally and were heavily owned, so when rate expectations shifted after the jobs report, they became a natural source of liquidity. The key question is whether hyperscaler AI spending slows. At this stage, we are not seeing evidence of that.”
(Reporting by Rae Wee, Tom Westbrook, Ankur Banerjee and Shruti Agarwal; Editing by Shri Navaratnam and Thomas Derpinghaus)
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