South Korean stocks shift to caution amid AI rally concentration

South Korean stocks are transitioning from optimism to caution, driven by a market concentration in a few dominant AI chip companies, notably Samsung Electronics and SK Hynix. Investors are reportedly trimming their positions in these giants and exploring opportunities further down the AI supply chain. This shift is partly fueled by concerns over a potential market correction, especially if interest rates rise.

In parallel, China's semiconductor sector is demonstrating progress in AI capabilities. A research team, which includes Huawei, has successfully utilized the company's Ascend 910C chips to complete post-training for the DeepSeek-V4-Pro AI model. This development represents a significant step for China's domestic semiconductor industry in handling complex AI model training, with the overarching goal of reducing dependence on foreign technology, particularly in light of ongoing US sanctions.

This intense focus on AI and robotics stocks by institutional investors is also reshaping other investment landscapes. Bitwise Chief Investment Officer Matt Hougan observes that cryptocurrency is emerging as a contrarian investment. He notes that with major indices like the Nasdaq-100 experiencing substantial gains, crypto has receded from its previous position as a primary investment focus, creating a more challenging market environment for digital assets.

Furthermore, the competitive landscape in memory chips is evolving. China's prominent memory chip manufacturers, such as CXMT, are progressing towards public listings. This move signals a potential long-term challenge to the established dominance of South Korean companies like Samsung Electronics and SK Hynix in the memory chip market. However, analysts currently assess the immediate threat posed by these Chinese firms as limited.