Seoul [Korea], June 8, (ANI): Korea's benchmark stock index, KOSPI, was down more than 8 per cent as the blistering AI rally fizzled and investors grew cautious amid a strong US jobs report and a renewed conflict in West Asia.
The benchmark index fell as much as 9 per cent intraday with heavyweights like Samsung Electronics and SK Hynix tanking 10.2 per cent and 7.7 per cent respectively. The selloff in tech shares continued after Broadcom last week disappointed with its guidance for the entire year.
The AI chip stocks had touched record highs as investors became confident of the success of the widespread adoption of artificial intelligence even as AI companies announced massive capital expenditure to ramp up their compute capacity.
Samsung and SK Hynix, the Korean chip titan, were the favoured bets for investors as poured billions of dollars in these stocks catapulting them into the trillion-dollar club. That rally seems to have now taken a breather as investors take adopt a wait and watch mode.
Just how important the two semiconductor stocks are can be gauged by the fact that both account for more than half of the benchmark on the back of a spectacular rally this year.
The Nasdaq had closed more than 4 per cent on Friday as a strong US jobs report raised bets that the Federal Reserve won't cut the interest rates.
Almost all the big tech names in Asia were down on Monday. Taiwan Semiconductor Manufacturing Co, or TSMC, was down 2.96%, while Hon Hai Precision, also known as Foxconn, fell 5.27%. Japan's Softbank plunged 6.1%, while Tokyo Electron and Advantest were down 7.45% and 5.72%, respectively.
Broader Asian indices were down as an escalation in West Asia triggered fears among investors of a renewed conflict and a prolonged closure of the critical Strait of Hormuz. Energy prices are already high driving the consumer sentiment in the US to record lows. A protracted conflict could ignite inflation fears and dash hopes of a rate cut even as the new Federal Reserve chief prepares for his maiden policy announcement. (ANI)
