After a sharp AI selloff shook global tech, institutional money is moving out of Korea's Kospi and into Taiwan's Taiex, betting on the island's dominant semiconductor supply chain and resilient GDP growth.
Global investors are rotating into Taiwanese stocks after a sharp selloff in AI-related shares, favoring the island's heavier weighting in semiconductor and hardware supply chains that stand to benefit from long-term AI demand.
The Taiex benefits from a higher weight in semiconductor foundries like TSMC, which are seeing structural demand growth from AI infrastructure builds, while the Kospi is weighed down by memory chip margin concerns.
Analysts see the Taiex potentially retesting its July highs above 24,000 if global appetite for tech hardware rebounds, though overhead resistance near 23,800 may cap initial moves.
Korean stocks lost favor as global funds trimmed exposure following the AI selloff, with Korea's large-cap tech names like Samsung disappointing on chip margins and memory demand outlook.
Oversupply in the memory chip market and disappointing forecasts from Samsung and SK Hynix are spurring a flight from Korean equities, compounded by slowing export momentum.
A rebound in high-bandwidth memory (HBM) demand for AI servers could lift Korean chip stocks, but near-term headwinds from inventory buildup and Chinese competition keep the outlook cautious.
The AI selloff that triggered the rotation is bearish for NVIDIA, the poster child of AI hardware, as investors reassess near-term demand and frothy valuations.
Some investors view the selloff as a healthy correction given Nvidia's still-dominant position in AI GPUs, but caution is warranted until Q3 earnings confirm sustained hyperscaler spending.
Technical support sits at the 200-day moving average near $100, but a break below that could see a drop to $85 if AI sentiment continues to sour.
Global investors are reallocating from South Korean equities to Taiwanese stocks following a broad AI-driven selloff, favoring Taiwan's deeper semiconductor and hardware tilt. Korean tech shares like Samsung fell on memory chip margin fears, while Taiwan's TSMC gained as a structural AI play. The rotation underscores shifting regional bets in Asia's tech sector.
Taiwan's equity market has a higher concentration in semiconductor and foundry companies that are seen as long-term AI beneficiaries, while Korean stocks rely more on memory chips where oversupply concerns have intensified post-selloff.
The shift may be short-term as the AI selloff rebalances sector weights, but if memory chip oversupply persists, it could become a medium-term headwind for Korean equities.
Technology hardware and semiconductor manufacturing are the primary beneficiaries, with TSMC leading the inflows as the global leader in advanced chip production.