A sell-off in AI-related stocks triggered by a sharp decline in Asian semiconductor shares is impacting global risk assets, according to analysts.
On June 23, Bloomberg reported that the drop in semiconductor stocks, particularly in South Korea, combined with the structure of leveraged exchange-traded funds (ETFs), is increasing volatility in global markets. The significant declines in major semiconductor companies like Samsung Electronics and SK Hynix have shaken the Asian markets and extended their effects to U.S. tech stocks.
U.S. markets closed lower on June 23, with the S&P 500 down 1.44%, the Nasdaq falling 2.21%, and the Dow Jones Industrial Average dropping 0.09%. The semiconductor sector was particularly weak, with the Philadelphia Semiconductor Index plunging 7.9%. Individual stocks also saw substantial declines, with Micron down 13.2%, Qualcomm falling 8.0%, Intel decreasing by 6.1%, and Nvidia dropping 4.1%.
The shock in the South Korean market is seen as a catalyst for the global trend. The previous trading day, the KOSPI experienced heightened volatility, triggering a circuit breaker, with Samsung Electronics and SK Hynix leading the decline with drops of around 12%. Analysts point out that the mechanical rebalancing of structured products like leveraged ETFs has amplified selling pressure, exacerbating the downturn. These leveraged products are designed to maintain ratios through automated trading, which can lead to additional selling in a down market, increasing volatility.
Market observers note that the adjustment in South Korean semiconductor stocks is triggering a risk-averse sentiment across global asset markets, extending beyond regional issues.
Kim Se-hwan, a researcher at KB Securities, stated, "The semiconductor shock originating from Asia has led to a sharp decline in the Nasdaq," adding that concerns over valuations in AI and semiconductor sectors are contributing to the market's downturn.
* This article has been translated by AI.
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