Taiwanese AI stocks and Korean battery stocks both plummeted! Are the two major technology bubbles in Asia going to burst this year?

Since the beginning of this year, AI and battery stocks have become the main driving forces behind the significant rise in Taiwan and South Korea stock markets.

The KOSDAQ index, which includes popular battery stocks in South Korea, has seen the second highest increase this year, following the NASDAQ index.

The Taiwan Weighted Index has also climbed to become the fourth strongest global stock index. As of July 13th, the top 5 performing stocks in Taiwan this year are Weichuang, Gigabyte, Creative, Quanta, and Chicony, all of which are AI-related stocks. Weichuang takes the lead with a 349% increase.

However, recently, both AI stocks in Taiwan and battery stocks in South Korea seem to have reached their peak.

Following Monday's sharp decline, AI stocks in Taiwan fell over 6% today

Taiwan stocks plummeted on the last trading day of July. Under the "double blow" of the significant downward revision of revenue guidance by the leading AI hardware company and institutional bearishness on the AI sector, the computer and peripheral equipment sector in Taiwan plummeted by 6.48% on Monday. Since July, this sector has accumulated a nearly 27% increase.

In the past two trading days, this sector in Taiwan has continued to decline, with a further sharp drop of 6.62% on Wednesday.

At the close on Wednesday, the Taiwan Weighted Index fell by 1.85%, with AI concept stocks leading the decline.

Weichuang, Quanta, and Weiying, among other AI concept stocks, all hit the limit down.

Today, the AI stocks in the Taiwan stock market fell due to the impact of the "black swan" event in the United States.

As Fitch Ratings downgraded the US debt rating to "AA+" on August 2, major US tech stocks collectively declined before the market opened. Apple fell nearly 1%, while Microsoft, Google, Amazon, and Meta all fell over 1%. Tesla fell more than 3%.

The Asia-Pacific markets also closed lower.

However, some analysts believe that the AI stocks in the Taiwan stock market have been on a strong upward trend for over a month, and the continuous decline raises doubts about whether "AI is really taking a break."

Some analysts also mentioned that US tech giants continue to drive the AI competition, indicating a long-term trend in AI. As the AI theme is quite extensive, the current capital turnover and correction are not necessarily bad things. After the capital rotation, the AI sector is expected to rebound in the second half of the year.

Short selling of Korean battery stocks surges as three major Wall Street banks collectively bet against the decline of Korean battery stocks

Recently, the "tenfold monster stock" in the Korean power battery sector has experienced a thrilling trend.

EcoPro, the leading battery material manufacturer in Korea, has surged nearly tenfold since the beginning of this year and has been favored by Korean retail investors. However, on July 26, just after EcoPro's stock price reached a new all-time high, it plummeted by nearly 30% in less than an hour. The decline continued on the 27th, with a cumulative drop of nearly 20% over the two days.

Similarly, POSCO, which has also been favored by retail investors this year, experienced a similar trend last week.

POSCO Chemical, a subsidiary of POSCO Group, is a battery material supplier that provides materials to LG Energy Solution, BYD, and other companies. POSCO's stock has risen by 122% this year. According to industry insiders, the sudden drop in the stock price of EcoPro last Wednesday was caused by a large-scale sell-off by retail investors.

Data from the Korean Exchange showed that retail investors sold a net total of 629.5 billion Korean won worth of EcoPro stocks and 739.2 billion Korean won worth of subsidiary company EcoPro BM stocks from June 24th to 28th.

Until recently, battery stocks such as EcoPro, Pohang Iron and Steel, and LS Group in South Korea have remained bullish. However, concerns about the increasing short-selling of battery stocks in the market are growing.

In early July, LS Group in South Korea announced an accelerated entry into the electric vehicle charging industry, which attracted attention to LS as a new battery concept stock.

Data from the Korean Exchange showed that short-selling transactions by investors targeting the KOSPI index and the Kosdaq index reached a monthly record high in July, totaling 22.87 trillion Korean won (equivalent to 17.83 billion US dollars), an increase of over 55% compared to the previous month.

Some institutional investors also view the recent rise in battery stocks in South Korea as a bubble and have participated in short-selling, betting on a downward adjustment in South Korean battery stocks.

According to data from the operator of the Korean Exchange, Goldman Sachs, Merrill Lynch, and Morgan Stanley were among the institutional investors that appeared on the list of investors with a large short position in EcoPro during the past five trading days.

Concerns about short-selling of battery stocks are affecting the overall stock market sentiment in South Korea, and the volatile fluctuations in large battery stocks are increasing concerns about the volatility of the Korean technology market.