Nikkei, Kospi, Topix: Concern about AI and US inflation – stock prices in Asia are crashing
Good balance sheet results no longer allay investors' worries. A deep loss of trust is driving chip values in South Korea and Japan further downwards - and with them the indices.
Electronic stock exchange board: On Thursday, Japan's leading index Nikkei-225 temporarily fell by more than four percent. Photo: REUTERS
Tokyo. Doubts about the boom in artificial intelligence (AI) have accelerated the sell-off on Asia's stock exchanges. In addition to the growing doubts about the profitability of AI data centers and their suppliers, the chip industry, falling prices on Wall Street and inflation data in the USA clouded the mood.
The Kospi dropped to 5,568 points by 11:14 a.m. local time. The world's two leading memory chip manufacturers were primarily responsible for this: Samsung Electronics temporarily lost more than eight percent of its value, SK Hynix even lost more than ten percent.
The Nikkei-225 is not quite as dominated by chip values as the Kospi. Nevertheless, it fell to 64,489 points by the lunch break. The Japanese memory chip manufacturer Kioxia contributed to this with a loss of around eleven percent.
The more broadly weighted Topix, on the other hand, only fell by 2.5 percent to 3,993 points because individual sectors such as retail, the pharmaceutical industry and transport companies increased.
Other Asian stock exchanges also came under pressure: The Straits Times Index in Singapore and the Hang Seng Index in Hong Kong each lost around one percent in the first 90 minutes of trading.
The Shanghai Composite Index lost 1.4 percent.
Hoping for TSCM's quarterly results
Even good TSMC numbers are unlikely to help
Some investors are hoping that Taiwan's TSMC, the world's largest contract chip manufacturer, could turn the mood around with a strong quarterly result. The group will explain its figures in a conference call with investors from 8 a.m. German time.
But Fumio Matsumoto, chief strategist at Japanese broker Okasan Securities, expects that even good results are unlikely to dispel investors' doubts about the AI boom. The good results in the AI business have already been priced in, says the strategist. The market is therefore unlikely to rise much in the coming reporting season.
Shingo Ide, chief equity strategist at the economic research institute of the life insurer Nippon Life (Nissay), warned that even a vague uncertainty could currently have a strong impact on prices. Catchy news such as an advance by Chinese memory chip manufacturers or a US inflation rate above expectations would have led to “a wave of profit-taking” in this environment, Ide argued in an online comment for a forum for the business newspaper Nikkei.
Small deviations with big consequences
The paradox: The US consumer price index in September, with an increase of 3.7 percent, was only 0.1 percentage points above market expectations. “If stock prices weren’t overvalued, this would probably have been dismissed as ‘almost as expected,’” Ide writes.
He therefore warns that the price slide could deepen. Until now, the Nikkei had considered the 65,000 point mark as the lower limit. On Thursday morning the index had already slipped below. If selling pressure from foreign investors increases, the leading index could fall to the lower end of its usual fluctuation range, i.e. to around 60,000 points.
The Nikkei 225 was last at this level in May, shortly before investors drove the shares of chip manufacturers and their suppliers to unprecedented highs. Such a relapse would be an abrupt turnaround: just last week, the index recovered to more than 70,000 points.
Foreign exchange and bonds
Concerns about the US economy and debt in Europe were also reflected in the foreign exchange market. The dollar temporarily fell by 0.4 percent to 157.70 yen. The euro also traded lighter than the previous day at 177.09 yen. At the end of July, the euro was ten yen stronger.
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Yields on Japan's government bonds (JGBs) also continued to fall. The yield on ten-year JGBs fell by 0.065 percentage points to 2.93 percent. Last week they were still at 3.105 percent. Naka Matsuzawa, the bond strategist at the Japanese investment bank Nomura, sees this as a change in sentiment: In Japan, rising yields would no longer push share prices down as before, but falling share prices would lower yields.
Exports
Exclusive figures: Trade deficit with China rises to more than 100 billion euros for the first time
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