Taiwanese shares have outperformed their South Korean peers by the widest margin since 2009, underscoring their relative resilience as the Middle East tensions roil markets.
Last month, Taiwan’s benchmark TAIEX fell 10 percent, while South Korea’s KOSPI gauge plunged 19 percent. Taiwan’s largest equity exchange-traded fund was set for record inflows in the month as domestic investors piled into the technology-heavy product.
The more modest decline in Taiwanese shares also reflects their smaller gains of about 22 percent from the beginning of the year up to the start of the Iran conflict, compared with a 48 percent rally in South Korean stocks that made them the world’s best performers at the time.
Photo: Ritchie B. Tongo, EPA
Investors remain broadly constructive on Taiwan given its key role in the global semiconductor supply chain. HSBC Holdings PLC upgraded the Taiwanese stocks to neutral to increase its exposure to the artificial intelligence (AI) theme in Asia.
“We prefer Taiwan over Korea as our primary AI-related equity exposure in the region,” with earnings expectations still among the strongest in Asia, HSBC strategists including Herald van der Linde wrote in a note yesterday. On the other hand, highly concentrated holdings in South Korea by global emerging market funds risks more outflows, he said.
Asian stocks were mostly lower on the final day of last month and first quarter yesterday as investors weighed a report indicating US President Donald Trump was willing to end the Iran war even if the key Strait of Hormuz remained closed but also threatened to strike its energy infrastructure if it did not make a deal.
Seoul led losses by shedding 4.3 percent and Taipei fell 2.45 percent. Tokyo, Shanghai, Singapore, Bangkok and Jakarta were also down.
The KOSPI extended its decline from a record high in late February to nearly 20 percent, the threshold typically considered a bear market. Samsung Electronics Co and SK Hynix Inc, the country’s two most valuable stocks, were the biggest drags, dropping more than 5 percent each.
South Korean equities were among the hardest hit in the month as fears of quicker inflation and higher interest rates led to doubts about the durability of the AI boom.
“Everyone’s attention is stuck on this war in the Middle East,” Reed Capital Partners Pte Ltd chief investment officer Gerald Gan (顏傑瑞) said in Singapore. “As long as there are no meaningful signs of both sides wanting to back down, more weakness will be reflected in the equity market, and that includes the big tech names in the KOSPI.”
Beyond geopolitics, investor unease has been compounded by Google’s new technology, which the company said can sharply reduce the amount of memory needed to train large language models — a development that may erode the pricing power of South Korean chipmakers if hyperscalers require fewer high-end components. Samsung Electronics and SK Hynix have seen multi-day selloffs.
“Investors are also worried about how the recent developments in Google’s TurboQuant could affect demand for memory chips, a core product of South Korea’s semiconductor industry,” Natixis SA senior economist Gary Ng (吳卓殷) said. “Investors can only ride the volatility until things become more certain.”
UNPRECEDENTED PACE: Micron Technology has announced plans to expand manufacturing capabilities with the acquisition of a new chip plant in Miaoli Micron Technology Inc unveiled a newly acquired chip plant in Miaoli County yesterday, as the company expands capacity to meet growing demand for advanced DRAM chips, including high-bandwidth memory chips amid the artificial intelligence boom. The plant in Miaoli County’s Tongluo Township (銅鑼), which Micron acquired from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion, is expected to make a sizeable capacity contribution to the company from fiscal 2028, the company said in a statement. It would be an extended production site of Micron’s large-scale manufacturing hub in Taichung, the company said. As the global semiconductor industry is racing to reach US$1 trillion
ABOVE LEGAL REQUIREMENT: The Ministry of Economic Affairs is prepared if LNG supply is disrupted, with more than the legal requirement of 11 days of inventory Taiwan has largely secured liquefied natural gas (LNG) supplies through May and arranged about half of June’s supply, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Since the Middle East conflict began on Feb. 28, Taiwan’s LNG inventories have remained more than 12 days, exceeding the legal requirement of 11 days, indicating no major supply concerns for domestic gas and electricity, Kung said at a meeting of the legislature’s Economics Committee in Taipei. The ministry aims to increase the figure to 14 days by the end of next year, he said. While one or two LNG or crude oil shipments for May
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
Memory chip stocks extended their losses yesterday after Alphabet Inc’s Google publicized research that could allow more efficient use of the storage needed for artificial intelligence (AI) development. SK Hynix Inc and Samsung Electronics Co, South Korean leaders in the market, fell more than 6 percent and about 5 percent respectively in Seoul. In the US, Micron Technology Inc, Western Digital Corp and Sandisk Corp slid more than 2 percent in pre-market trading, after they all closed lower on Wednesday. Memory companies have been on a tear in recent months as the rapid development of AI infrastructure triggered a spike in chip
RSS