Asian shares declined in the aftermath of lower stocks in several major tech companies on Thursday as concerns over the possibility that the demand in memory chip is nearing its peak.
A report released earlier this week by a financial firm stated that the so-called super cycle in micro-chip demand is likely to peak soon, noting that NAND prices have started to move backwards and the visibility on DRAM supply-demand dynamics has gone down into next year.
Economist Hiroshi Watanabe said that the statement is true given that the year-on-year growth of semiconductors seem to be peaking out and seeing the current high sales level, some market players would be naturally worried.
As a result, shares of tech giants, including Amazon.com, Apple Inc., Alphabet Inc., and Facebook dropped between 2 and 4 percent on Wednesday’s close.
South Korea’s smartphone maker Samsung Electronics Co. Ltd. and chipmaker Taiwan Semiconductor Manufacturing Company Limited (TSMC) closed up 4.3 and 3.6 percent lower as well.
Some of the US stocks also ended lower with the NASDAQ Composite index losing 1.2 percent to $6,824.39. S&P 500 plunged 0.04 percent to $2,626.07, while Dow Jones Industrial Average climbed 0.4 percent to $23,940.68.
However, Watanabe also said that the world’s demand for memory chips is likely to keep on growing by next year and that he does not see the need to be pessimistic at the moment.
Some market players sees the tech sell-off as more about grabbing profit ahead of the end of the year and that the drop was only a healthy adjustment.
MSCI’s broadest index of Asia-Pacific shares outside Japan pared back its 11th monthly gains as it fell 1.4 percent to $554.25, following the tech companies’ shortcomings.
Japan’s Nikkei 225 was the only one to recover previous losses and offset the impact of weak tech shares, with a 0.6 percent gain to ¥22,747, marking a three-week high on Thursday.
Hong Kong’s Hang Seng index lost 1.2 percent to HK$29,264 and is expected to drop for a fourth day, whereas Shanghai Composite in mainland China dropped 0.6 percent to CN¥3,317.19.
South Korea’s KOSPI was also down by 1.4 percent to ₩2,476.37, while India’s BSE Sensex shed 0.7 percent to ₹33,361.77.
Australia’s S&P/ASX 200 declined by 0.6 percent to A$5,969.89, weighed down by Prime Minister Malcolm Turnbull’s announcement of holding a wide-range public investigation into the banks.
European shares increased on Thursday, with Britain’s FTSE 100 rebounding from an early decline by gaining 0.2 percent to £7,411.75.
Germany’s DAX edged higher by 0.8 percent to €13,170.50, while France’s CAC 40 gained 0.5 percent to €5,424.95.
Italy’s FTSE MIB was also up by 0.8 percent to €22,524.50, whereas Spain’s IBEX 35 increased 0.3 percent to €10,301. Euro Stoxx 50 climbed 0.6 percent to €3,611.50 as well.
Continental markets are also likely to have moderate gains by the start of the session as investors turn their attention on bank and financial sector, following Swiss lender Credit Suisse AG’s announcement to raise shareholder’s returns.
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