The tech world was ablaze with uncertainty as Japanese markets experienced a prolonged slide, spurred on by a heavy sell-off in technology stocks, particularly following the significant drop in chipmaker Nvidiaโs shares. The fear of potential competition from Chinese start-up DeepSeek impacting US dominance in AI sent shockwaves through Wall Street and Silicon Valley.
Here’s a closer look at the recent market dynamics:
- Japanโs tech-heavy Nikkei 225 dipped by as much as 1.7% in morning trading before recovering to a 0.6% decrease. On the other hand, the broader Topix index, with lower weightings for Japan’s tech exporters, saw a modest 0.5% gain.
- In Hong Kong, Chinese tech companies witnessed gains, with chipmaker SMIC being a notable exception, opening over 2% down. SoftBank Group, a prominent player in the tech sector, saw a staggering 5.2% initial decline in trading, translating to a 12% decrease for the week.
- Analysts attributed SoftBank’s woes to the overnight 10% drop in Arm Holdings shares, a chip design company where SoftBank holds an 88% stake.
- Despite this turbulence, SoftBank shares remain significantly higher year-to-date, exemplifying the company’s characteristic volatility.
Last weekโs high-profile partnership announcement involving SoftBank, Oracle, and OpenAI in a substantial data centre investment marked a potential turning point in AI capex inflow, as suggested by market experts.
This episode of market turmoil demonstarted a significant impact on top-performing tech stocks in Japan, including Disco, Advantest, and Furukawa Electric, which had surged in recent months on the back of projected high-end chip and data centre demand. Shares in these companies saw notable declines, mirroring the broader market trend of sell-offs and cautionary behavior.
On the international front, the US dollar experienced a slight rebound against other currencies, while the yen depreciated against the greenback. In Hong Kong, the Hang Seng benchmark saw a positive start, led by tech titans Tencent, Alibaba, and Baidu.
As Lunar New Year festivities took hold in South Korea, Taiwan, and Hong Kong, trading activity was subdued. Echoes of uncertainty and caution reverberated in the tech sector across various global markets, serving as a reminder of the fragile equilibrium of the digital landscape.
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