Asian stock markets fell collectively, with the Korean market plunging 4.5% and the Japanese market dropping over 1%; SK Hynix tumbled 7%.

Asian equities slumped across the board on Tuesday, failing to extend Wall Street’s overnight rebound in tech stocks. South Korea’s chip stocks posted particularly sharp declines. Meanwhile, U.S. Treasury yields remained elevated, as investors awaited key technology company earnings reports later this week to further clarify market direction. On Tuesday, South Korea’s major indices all plunged more than 4%, leading the broader Asia-Pacific (APAC) region lower. The MSCI Asia Pacific Index declined approximately 1%, with eight of its eleven sub-industries posting losses; the number of declining stocks was roughly triple that of advancing ones. This regional weakness stood in stark contrast to U.S. markets. On Monday, New York’s Philadelphia Semiconductor Index rose 1.6%, ending an eight-day losing streak; the Nasdaq Composite gained over 1%, NVIDIA rose 1.4%, and Tesla surged 3.8%. Yet during Asian trading hours, Nasdaq-100 futures briefly turned positive early in the session before slipping 0.1%, reflecting divergent sentiment across the region. South Korea led the decline, with APAC tech stocks broadly under pressure The APAC technology sector weakened overall on Tuesday, as persistent concerns over the sustainability of AI-related capital expenditures continued to weigh on investor confidence—largely offsetting the uplifting effect of the prior day’s U.S. rally. On Tuesday, chip giant SK Hynix plunged over 7%, nearing its lowest level since April; Samsung Electronics fell more than 3%. Data center infrastructure firm Elice opened at 75,700 KRW—down 16.35% from its IPO price of 90,500 KRW—and plunged as much as 32% intraday, further dampening market sentiment. Australia’s S&P/ASX 200 Index declined approximately 0.84%. Japan’s market was likewise not spared: the Nikkei 225 Index fell 1%, and the Topix Index dropped about 0.9%. Japan’s AI hardware and data center supply chain stocks slid sharply, with the entire tech sector entering a correction phase. Leading conductor packaging materials provider Resonac Holdings plunged 6.43%; Fujikura—a core supplier of optical fiber for AI data centers—fell 6.34%. SoftBank Group, a bellwether for tech investment, also tumbled 6.34%. In addition, Furukawa Electric—another player in the optical communication cable segment—declined 5.42%. Major silicon wafer manufacturer Sumco dropped 4.79%; semiconductor equipment maker Ebara Corporation fell 4.12%; and SHIFT Software—the leading software testing firm whose shares had surged earlier on strong earnings—saw profit-taking today, falling 4.12%.

How do you view the recent market declines?

Here is my personal perspective: I. External Factors 1. U.S. Treasury Yield and Rate-Hike Expectations: September’s U.S. CPI came in at a higher-than-expected 3.7% year-on-year, pushing the 30-year Treasury yield above 5.7%—directly compressing valuation headroom for globally high-valuation growth stocks. Long-duration tech sectors such as AI and semiconductors were hit first and hardest. 2. Geopolitical Tensions and Oil Prices Fueling Inflation: Escalating Middle East tensions pushed international oil prices above USD 106 per barrel, heightening shipping risks in the Strait of Hormuz and stoking expectations of imported inflation—further reinforcing global central banks’ resolve to maintain high interest rates and triggering a rapid contraction in global risk appetite. 3. Sentiment Contagion Across APAC Markets: Collective panic in Japan and South Korea directly dragged down A-share sentiment. II. Internal Factors 1. Concentrated Profit-Taking in Overvalued Sectors: Prior to the downturn, capital had become extremely concentrated in high-flying tech segments—including computing power infrastructure and optical modules—accumulating massive unrealized gains. Under external negative catalysts, quantitative and short-term funds exited first, triggering a cascading ‘sell-high, sell-valuation’ effect. 2. Portfolio Rebalancing: Capital rotated out of high-valuation sectors, resulting in significantly larger declines in the ChiNext Index and STAR Market 50 Index compared to the Shanghai Composite Index. 3. Risk-Aversion Ahead of Q3 Earnings Season: Ahead of fundamental verification via third-quarter earnings reports, investors preemptively locked in profits on names that had rallied sharply but lacked corresponding earnings confirmation—amplifying index volatility. In my view, this round of decline represents a natural market correction—not something warranting alarm. Its only truly indicative significance lies in signaling the beginning of the unwinding of the multi-year tech-stock ‘herding’ phenomenon. The market is now poised to embark on a new cycle of sectoral ‘herding’. III. Sectors We Remain Bullish On 1. CXO Industry: This sector has been extensively analyzed previously, so we won’t elaborate further here. 2. Lithium-Ion Battery Separator Industry: From the broader lithium-ion battery industry perspective, long-term growth prospects remain highly certain—though the primary growth driver is shifting from electric vehicle (EV) batteries to energy storage system (ESS) batteries. This transition inevitably triggers industry-wide restructuring, resulting in uneven performance across sub-segments and creating only selective, structural opportunities. Within the broader lithium-ion battery industry, the separator segment holds the greatest breakout potential: • Inefficient capacity has been fully purged: Excess low-efficiency capacity built during the industry’s peak years of 2021–2022 has been largely eliminated during the 2024 industry downturn. Overall industry capacity utilization has rebounded from under 50% in 2024 to over 75% in 2026, with top-tier firms achieving utilization rates exceeding 85%—approaching full capacity.

Asian Markets Dip as Investors Weigh Tech Earnings, Gulf Tensions

16 hours ago

Asian stocks dipped amid mixed tech earnings and Gulf tensions, while Brent crude rose to $110.03 per barrel. Investors weigh AI sustainability and geopolitical risks ahead of US midterms.

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Asian Markets Dip as Investors Weigh Tech Earnings, Gulf Tensions

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