AI boom reshuffles global stock market pecking order as South Korea and Taiwan surge
The AI boom is reshaping the global stock market, particularly benefiting South Korea and Taiwan. This surge is driven by increased demand for AI hardware, leading to significant pricing power for chipmakers. However, concentration risk in Asian portfolios may limit further gains as investors react to market volatility.
- ▪South Korean and Taiwanese stock indices are now seen as proxies for AI and semiconductor markets.
- ▪An explosion in demand for AI hardware is creating supply shortages and driving up prices for chipmakers.
- ▪Recent foreign investment sell-offs have led to sharp fluctuations in South Korean equities.
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"Both indices have effectively become AI and semiconductor proxies," said June Chua, head of Asia equities at Manulife Investment Management. Goldman Sachs' chief regional equity strategist for Asia-Pacific, Tim Moe, agreed."It's the AI hardware theme that's clearly what is propelling things." The transition toward agentic AI has triggered "an explosion of so-called token demand," creating a supply shortage that is driving extraordinary pricing power for chipmakers, he said.That also could make the gains more vulnerable to reversal. South Korean equities dropped late last week after foreign investors dumped roughly $13 billion worth of local stocks, triggering sharp swings in the benchmark index.
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