Korea Bears Brunt as Higher Bond Yields Weigh on Chip Stocks

South Korea experienced a significant selloff in Asian chip stocks early on Wednesday. This downturn was attributed to rising bond yields, which heightened concerns about the substantial amounts of cash being spent by major technology companies.

The surge in global bond yields, which reached multi-year highs on Tuesday, contributed to the decline. This increase in yields was driven by factors including a stalemate in the Middle East, renewed inflation worries, and concerns over fiscal health. According to Geoff Yu, a senior EMEA market strategist at BNY, the selloff reflects rising real yields and term premia due to increased government debt issuance, weakening pension demand, and more price-sensitive private investors.

The impact of higher bond yields was particularly notable in the tech sector, which led losses on the Stoxx 600, falling 2.5 per cent. Chipmakers Infineon and Aixtron saw significant declines of 7.6 per cent and 8.8 per cent, respectively. Bloomberg reported that South Korea led the selloff in Asian chip stocks.

Brief written by urgent.news from Bloomberg, The Business Times - Companies & Markets — 2 reports on this story. Machine-written — may contain errors; check the original before relying on it.