Key facts
- South Korean stocks continued their sharp decline for a second consecutive session.
- The benchmark KOSPI index has fallen significantly.
- Major chipmakers Samsung Electronics and SK Hynix have fallen out of the $1 trillion market capitalization club.
- Asia-focused equity hedge funds are on track for their largest monthly drawdown on record, falling 18.6% through July 28.
- Zhongji Innolight's Hong Kong shares closed down 2.04% on its debut.
- Zhongji Innolight's Shenzhen shares plunged 9.15% on record trading volume.
- Global technology stock declines have erased earlier gains for Chinese AI and semiconductor companies.
- Retail investors are showing increased caution by net selling single stocks and increasing ETF purchases.
- Asian stock markets traded with volatility on Thursday morning.
- Investor sentiment is pressured by U.S.-Iran tensions and inflation concerns.
Asian stock markets are experiencing a broad sell-off, with South Korea's benchmark KOSPI index seeing significant declines for a second consecutive session. Major chipmakers Samsung Electronics and SK Hynix have dropped out of the $1 trillion market capitalization club following a reassessment of artificial intelligence (AI) expectations by investors. This downturn is attributed to reduced interest in chipmakers and concerns over leveraged trading, prompting regulatory review in South Korea.
The global tech sell-off has erased earlier gains for prominent Chinese AI and semiconductor companies, significantly impacting domestic mutual funds that held substantial investments in these sectors. Asia-focused equity hedge funds are on track for their largest monthly drawdown on record, falling 18.6% through July 28, according to Goldman Sachs, after crowded positions in AI hardware bets drove steep losses. Zhongji Innolight, the world's largest optical module manufacturer, saw its shares fall on its Hong Kong market debut, closing down 2.04% while its Shenzhen-traded shares plunged 9.15% on record trading volume.
Retail investors are exhibiting increased caution, marked by significant net selling of single stocks and a notable increase in ETF purchases, suggesting a shift towards more diversified and less risky investment strategies. Investor sentiment across Asian markets is also pressured by escalating U.S.-Iran tensions and inflation concerns, contributing to the volatility. Dip buying has provided some support after recent sharp declines, but the overall market remains under pressure from the chip slump and geopolitical factors.