ALL ABOUT AI BEFORE IRAN WAR
Often, steep market declines have a lot more to do with flows than fundamentals.
Prior to the Iranian crisis, hot money was flooding into Asia, looking for semiconductor and hard tech plays as global investors rotated out of software companies into AI infrastructure. The broadening of the AI trade laid the foundation for this week’s rout.
Indeed, until now, the investment narratives were all for Asian hard tech. Samsung and SK Hynix were believed to have entered a years-long super cycle, after both companies said that the supply crunch in memory chips would continue until 2027. Meanwhile, TSMC’s strong earnings bolstered the case that US hyperscalers will keep on spending, ensuring windfalls for Asian suppliers.
No surprise that hot money chased after the few winners. In the US, the US$16 billion iShares MSCI South Korea ETF recorded over US$1.2 billion in inflows in the week before the Middle East turmoil, the most in the fund’s 25-year history.
https://www.channelnewsasia.com/commentary/iran-war-asia-stock-markets-selloff-korea-japan-hk-5970341
