{"id":1348,"date":"2026-06-08T07:37:05","date_gmt":"2026-06-08T07:37:05","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=1348"},"modified":"2026-06-08T07:37:05","modified_gmt":"2026-06-08T07:37:05","slug":"how-a-few-ai-chip-giants-warped-asias-stock-picking-game","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=1348","title":{"rendered":"How a few AI chip giants warped Asia&#8217;s stock picking game"},"content":{"rendered":"<div><div><div><ul><li>Summary<\/li><li>Companies<\/li><\/ul><\/div><div><\/div><\/div><div>SINGAPORE, June 8 (Reuters) &#8211; Sam Konrad&#8217;s stocks are having a fantastic year, thanks to AI-fueled rallies in Taiwan and South Korea, but his fund is so top heavy with winners, he now needs to ditch his best performers.<\/div><div>&#8220;We have been forced sellers of TSMC, Samsung and MediaTek,&#8221; said Konrad, \u200binvestment manager for Asia Equity Income at Jupiter Asset Management, of the chip-making stocks, which have respectively gained 52%, 159% and 184% so far this year.<\/div><div>Just three \u200clarge Asian tech firms &#8211; TSMC, Samsung and Korean chipmaker SK Hynix &#8211; now account for almost a third of MSCI&#8217;s Asia Pacific ex-Japan Index, creating concentration risks that many active portfolio rules deem too high.<\/div><div>Forced selling across active funds like Konrad&#8217;s is one of several side-effects of a rally that is riding mainly on the explosion of a handful of companies.<\/div><div>That in turn has created distortions across the market while the forced selling has added to pressures on the battered Korean won.<\/div><div>According \u200bto HSBC, TSMC is the biggest portfolio underweight among Asian and global emerging-market funds, as the region&#8217;s record-breaking rally distorts its equity benchmarks and portfolio managers struggle to keep up.<\/div><div>The \u200bdouble-edged nature of concentration risks has also been seen during recent steep selloffs, with South Korean stocks sliding 12% and Taiwan down 6% in the last \u2060three session from their record highs as investors fret about AI valuations.<\/div><h2>CYCLE OF FORCED SELLING<\/h2><div>Expectations of runaway growth in profits have led to TSMC occupying 41.5% of Taiwan&#8217;s TAIEX (.TWII)<svg><\/svg><span>, opens new tab<\/span>, and Samsung and Hynix \u200bcomprising 55% of South Korea&#8217;s KOSPI (.KS11)<svg><\/svg><span>, opens new tab<\/span>, meaning these indexes are largely bets on one or two stocks &#8211; defeating the purpose of tracking a benchmark to represent a diversified portfolio.<\/div><div>That makes beating these benchmarks even \u200bmore difficult for active managers.<\/div><div>The degree of concentration &#8220;creates structural challenges,&#8221; said Herald Van der Linde, head of equity strategy for Asia Pacific at HSBC in Hong Kong, in a research note.<\/div><div>&#8220;As equities continue to outperform, funds will find it increasingly difficult to add exposure, reinforcing a cycle of forced selling and enlarging underweight positions even amid strong fundamentals.&#8221;<\/div><div>What&#8217;s more, many of the best-performing alternatives to these three stocks are still tied to the AI theme, meaning sector \u200bdiversification hasn&#8217;t helped returns. Information technology stocks have led the region with explosive gains, but other sectors like consumer staples and healthcare have lagged, according to Goldman Sachs.<\/div><div>The same is true at a \u200bcountry level, the bank says: While the MSCI Asia Pacific ex-Japan index is up 27% year-to-date, excluding Korea and Taiwan, it is down 4%.<\/div><h2>LOPSIDED MARKETS<\/h2><div>This dynamic is not new, having unfolded in the U.S. where the so-called \u200cMagnificent Seven technology \u2060stocks comprise about a third of the S&amp;P 500 index (.SPX)<svg><\/svg><span>, opens new tab<\/span> and have lured investor cash from active funds into passive, market or theme tracking funds.<\/div><div>In Asia, the concentration is more extreme, has unfolded more quickly and turbocharged the trend toward passive funds.<\/div><div>Over the last five years, Asia&#8217;s active funds have seen $269 billion of cumulative outflows, while passive funds have drawn in $510 billion, with a quarter of that coming in just the last six months, according to BNP Paribas&#8217; analysis of EPFR data.<\/div><div>&#8220;The size of recent inflows into the region\u2019s passive funds &#8230; has no precedent across the last 10 years,&#8221; said William Bratton, head \u200bof cash equity research for Asia-Pacific at BNP \u200bParibas Securities.<\/div><h2>CONCENTRATION RISK DRIVES STOCK PICKING SHIFTS<\/h2><div>In \u2060response, stock pickers have headed further down the AI supply chain, buying smaller-cap companies while emphasising the benefits of investing strategies that do not passively follow lopsided market indexes.<\/div><div>Isaac Thong, senior investment director for Asian equities at Aberdeen Investments, has for example recently added ASMPT (0522.HK)<svg><\/svg><span>, opens new tab<\/span> and Grand Process Technology Corp (3131.TWO)<svg><\/svg><span>, opens new tab<\/span>, both \u200bmid-sized suppliers to chipmaking firms.<\/div><div>Jupiter&#8217;s Konrad prefers larger stocks and has nearly half of his fund allocated to Taiwan and South Korea. He owns \u200bshares in electronics-makers Hon Hai (2317.TW)<svg><\/svg><span>, opens new tab<\/span> \u2060and Quanta (2382.TW)<svg><\/svg><span>, opens new tab<\/span>, as well as SK Hynix, with his largest position in chip designer MediaTek (2454.TW)<svg><\/svg><span>, opens new tab<\/span>.<\/div><div>&#8220;Our funds are very different to the benchmark, and the way we invest very different to our peers, which we think has helped us to outperform,&#8221; he said.<\/div><div>In Asia, concentration risk has become more pronounced than it was when Baidu, Alibaba and Tencent were market darlings and made up 37.14% of the narrower MSCI China benchmark at \u2060their peak in \u200bOctober 2020.<\/div><div>The turbulence that is driving in fund flows is also unprecedented in scale.<\/div><div>Rebalancing in foreigners&#8217; portfolios drove a record $27.9 \u200bbillion outflow from South Korean equities in May, exchange data showed, while at the same time Nomura has tracked an unprecedented $20.4 billion year-to-date inflow from U.S.-domiciled funds into South Korea and Taiwan.<\/div><div>&#8220;The relentless rally since April has increased concentration risk in Asian \u200bequities that we have never seen before,&#8221; said Rupal Agarwal, Asia quant strategist at Bernstein.<\/div><div><address><div><div><noscript>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"120\" height=\"120\" alt=\"Gregor Stuart Hunter\" class=\"wp-image-9\" src=\"https:\/\/reliablemovingcrews.com\/wp-content\/uploads\/2026\/05\/a8d647782541686b4c9068dd2dfa6f30.avif\"\/><\/figure>\n<\/noscript><\/div><div>Gregor Stuart Hunter<\/div><\/div><div><ul><li><span><div><svg><title>Email<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>X<\/title><\/svg><\/div><\/span><\/li><\/ul><\/div><\/address><\/div><\/div><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1346\">South Korea\u2019s KOSPI craters over 8% as Fed fears spark tech rout<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1344\">Oil market calm masks a host of unknowns<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1342\">Dollar scales two-month peak as Fed hike bets ramp up<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>Sam Konrad&#8217;s stocks are having a fantastic year, thanks to AI-fueled rallies in Taiwan and South Korea, but his fund is so top heavy with winners, he now needs to ditch his best performers.<\/p>\n","protected":false},"author":1,"featured_media":1347,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[134],"class_list":["post-1348","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-etfs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - 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