The AI trade lost more altitude, and it took broader emerging-market equities with it for a second day. MSCI's benchmark for developing-nation stocks slid more than 2% to levels last seen two months ago. In Seoul, the Kospi logged a fifth straight decline, dragged by chip leaders SK Hynix Inc. and Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. was down too.
Selling in Korea picked up after a report said China's CXMT Corp. has made headway on a new memory architecture that Korea's top chipmakers are pursuing too. Still, CXMT fell as much as 5.3% on Tuesday, echoing the wider tech-hardware slump, said Gary Tan, who manages portfolios at Allspring Global. "In a more bearish market, investors are likely focusing on the prospect of future supply growth, but the reality is that advanced AI memory requires lengthy qualification and verification cycles, meaning any competitive impact is likely to be gradual rather than immediate," he said.
Emerging markets catch the downdraft when the AI trade wobbles. Market Briefs covers that transmission free every weekday.
The mood around AI bellwethers has soured as investors weigh the burden of higher financing costs for the sector's investment plans, alongside worries about intensified competition. Yves Bonzon, Julius Baer's chief investment officer, said: "There is huge uncertainty as to how the profit pool will shift and how valuation will settle." He added, "As long as that uncertainty persists, and I think it is with us for the next few years, markets will be subject to violent bursts of profit taking such as the one we witnessed this morning on Korean semiconductor stocks."
The stock selloff spilled over to currencies, as weakness in the South Korean won alongside the Taiwanese dollar nudged MSCI's emerging-market FX gauge lower by 0.2%. In bonds, Romania stood out for the wrong reasons: after data showed inflation picking up and clouding the path to rate cuts, its 10-year yield rose 4 bps to 7.24% while similar maturities elsewhere in the region eased. For everyday investors, the takeaway is simple enough: AI's promise is big, but the path is choppy, and that chop is now showing up in stocks, currencies, and even government debt across emerging markets.
Currency gauges often move before equity indices do. Join Market Briefs free and follow the flows.
