SK Hynix, Samsung Electronics fall 7% as Asian equities decline, chip sell-off spreads

Asian equities declined as a semiconductor sell-off intensified, with investors pulling away from one of the year’s most popular investments due to high bond yields and geopolitical concerns. The MSCI’s Asia Pacific equities benchmark fell 2%, while South Korean shares dropped 5.5%. Chip leaders Samsung Electronics and SK Hynix both fell more than 7%, mirroring a semiconductor sell-off on Wall Street. Kioxia saw a 9% decline in Tokyo.

Key market movements included little change in S&P 500 futures, a 2.7% drop in Japan’s Topix, a 0.4% decrease in Australia’s S&P/ASX 200, a slight rise of the Hang Seng in Hong Kong, and a 1.7% fall in the Shanghai Composite. Meanwhile, 10-year Treasury yields edged down by one basis point to 4.69%, while bonds rose in Australia and New Zealand.

Oil prices rose for the fourth consecutive day, with no resolution in sight to the US-Iran conflict, which has lasted nearly six months. Brent crude traded above US$91 a barrel after jumping 4.5% over the previous three sessions. Kazunori Tatebe, chief strategist at Daiwa Asset Management, noted that with Middle East uncertainty lingering and yields remaining elevated, markets were likely to stay in a risk-off stance.

Rising yields would increase borrowing costs for tech firms, raising questions about capital spending and the impact on AI infrastructure.

The chip sector was under pressure as the Philadelphia Semiconductor Index fell 5% on Tuesday, its steepest drop since late July. The Asian semiconductor gauge declined 3.1%, with Taiwan Semiconductor Manufacturing and Renesas Electronics among the decliners. Higher borrowing costs added to market worries amid ongoing uncertainty over the Iran war. Despite the long-term outlook for AI growth remaining intact, rising rates and geopolitical risk made investors less willing to pay a premium for long-term growth.

Unitree Robotics, a Chinese company, saw its shares surge 629% in its Shanghai IPO, becoming the first publicly traded humanoid robot maker in mainland China. The Canadian dollar strengthened following an agreement to delay 50% tariffs on Canadian products for three days. Gold steadied around US$4,340 an ounce after its biggest drop in nearly a month, as bond sell-offs and uncertainty about the Strait of Hormuz clouded the precious metal's outlook.

The U.S. 30-year yield remained little changed at 5.29%, while the U.S. stock market showed little movement as of 11.59 am Tokyo time.