Asian stock markets faced a decline on Friday following a sharp drop in the technology sector and reduced investor confidence in the market. This situation comes as the yen and government bonds have strengthened as safe havens against market risks.
Concerns About the Technology Sector
After AI-related companies reached record highs in June, the stocks of these companies have sharply declined due to concerns including potential overvaluation, high infrastructure and hardware costs, and rising service expenses. This, along with oil prices exceeding $100 amid tensions from the Iran war, has led to increased inflation rates and higher borrowing costs.
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Consequences of Rising Oil Prices and Interest Rates
Analysts stated that although strong financial results in recent quarters have alleviated some concerns, investors are looking for better results to justify their support for companies. For example, the financial results of Facebook's parent company, Meta, and semiconductor equipment maker, Lam Research, exceeded expectations this week, but the stocks of both companies faced declines.
Foad Razaghzadeh from FOREX.com stated, "Even positive news is being overlooked. Strong results are no longer sufficient unless the outlook aligns with rising valuations. Investors have become extremely unforgiving."
Meanwhile, the exit of investors from the technology sector has benefited industrial companies that were overlooked during the AI bubble, as the Dow index rose this week while the Nasdaq and S&P 500 indices fell.
In Asian markets, Seoul experienced a decline of over 2%, leading the stock market drop, resulting in a tough end for the KOSPI index. Additionally, shares of semiconductor company SK Hynix in the U.S. fell by more than 8%.
The situation in other markets was similar, with a sharp decline in the Nikkei 225 index in Tokyo and other major Asian markets such as Hong Kong, Shanghai, Sydney, and Singapore.
At the same time, with strong inflation data in Japan, the yen has strengthened, and demand for U.S. bonds has also increased.
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