A strategist argues the post-weekend sell-off in Korea and Taiwan is mainly a tactical correction, not a broken trend. He says weaker Broadcom guidance, a hot US jobs report, and renewed US-Iran tensions pushed oil higher and sparked profit-taking in the region’s most crowded winners, but he still sees Korea as undervalued and the pullback as a buying opportunity.
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The speaker frames the move lower in Asian equities as a “perfect storm” of three weekend catalysts: Broadcom’s guidance disappointed relative to expectations despite strong year-over-year growth, the US jobs report raised concern about a possible Fed rate hike next meeting, and US-Iran negotiations appear increasingly difficult. He says those factors lifted oil prices, which is especially negative for Asia, and triggered selling in the markets that had run up the most, especially where foreign institutions and domestic investors had made the most money. He focuses most on Korea and Taiwan, saying these are the two markets that have led Asia’s advance and are now seeing profit-taking in large, liquid, widely owned stocks. …
Tactically, this looks like a crowded-growth unwind rather than a thesis break, with Korea/Taiwan vulnerable until leverage and profit-taking subside. The key near-term risk is that oil and rate-hike fears keep pressure on the same names that led the rally.
Over the next few weeks/months, the setup turns constructive again if earnings estimates keep rising and memory pricing remains firm. A deeper washout would likely be followed by a rebound in the most fundamental AI-linked leaders rather than a broad regime change.
Structurally, the speaker is arguing that AI is a multi-year capital-spending and earnings regime that can broaden into wages, taxes, and fiscal capacity. Korea’s valuation discount remains a long-term feature unless the market fully re-rates the sustainability of semiconductor earnings.
The sell-off was driven by a weekend cluster of Broadcom disappointment, a hotter US jobs report, and worsening US-Iran negotiations.
The speaker lists these as the three main causes of the market weakness.
Korea and Taiwan are seeing profit-taking because they were the fastest-rising, most crowded Asian markets.
He says the strongest markets and the names most owned by foreign and domestic investors are getting sold.
Korea still looks undervalued because the KOSPI trades around 8x forward earnings, below its historical peak range.
The speaker compares current valuation with a 15-year history and argues it remains near trough multiples.
Do you agree that the South Korean market is undervalued, and what do you make of Taiwan and the broader North Asian markets?
He agrees with Korean authorities that the market is undervalued and says KOSPI is still around 8x forward P/E, near trough rather than peak valuations. He remains positive on Korea and Taiwan because AI capex, memory demand, and semiconductor pricing could stay strong longer, supporting earnings.
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