Global investors have raised concerns about excessive capital concentration in Samsung Electronics, SK Hynix, and Taiwan's TSMC. Following a surge in stock prices driven by the artificial intelligence (AI) boom, major asset management firms are realizing profits and shifting their focus to relatively underperforming stocks.
The Financial Times reported on July 13 that global asset managers are reducing their investment stakes in major Asian semiconductor companies. This move is not due to a downturn in the semiconductor market, but rather a risk management strategy as the weight of certain companies in indices has become disproportionately large.
In the past six months, the combined market capitalization of Samsung Electronics, SK Hynix, and TSMC has increased by approximately $1.8 trillion. The three companies now account for about 29% of the Morgan Stanley Capital International (MSCI) Emerging Markets Index.
As the weight of specific companies increases, global funds find it challenging to continue expanding their holdings, even if they maintain a positive outlook on those companies. This is due to the need to adhere to predetermined investment guidelines that prevent excessive concentration in particular stocks or countries.
BlackRock, the world's largest asset manager, has also recently taken profits from the rapidly rising semiconductor stocks. Wei Li, BlackRock's global chief investment strategist, noted that expectations for improved performance from semiconductor and memory companies have already been largely reflected in their stock prices.
While BlackRock maintains a positive outlook on emerging market equities, it is reallocating funds from the heavily appreciated semiconductor stocks to other emerging market stocks with more potential for further gains.
Fidelity International has identified the concentration of funds in a few semiconductor companies as a risk factor. With leveraged investments in the South Korean stock market increasing significantly, there are concerns that a decline in stock prices could lead to increased selling pressure and volatility.
Despite these concerns, the semiconductor market is still viewed as robust. Increased investments in AI data centers are driving demand for high-bandwidth memory (HBM) and advanced semiconductors. Additionally, a supply shortage in memory is supporting the performance of Samsung Electronics and SK Hynix.
However, if semiconductor companies expand their production facilities, the supply shortage may ease, potentially slowing price increases. The expansion plans of Chinese DRAM manufacturer Changxin Memory Technologies (CXMT) and NAND flash producer Yangtze Memory Technologies (YMTC) are also seen as a burden.
There are concerns that the diversification effect of investments in emerging markets has weakened. As the U.S. stock market is influenced by major tech stocks like Nvidia, the emerging market index has become heavily reliant on Asian semiconductor companies, exposing both markets to similar risks.
The Financial Times stated that while the performance of Asian semiconductor companies and AI demand remain strong, the expectations for improved performance have already been largely priced in, leading global investors to reduce their stakes in semiconductor stocks.
* This article has been translated by AI.
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