Higher for longer is testing Asia’s AI trade

Chipmakers have carried much of Asia’s market rally for the past 18 months, but sentiment is turning. Expectations of further US interest rate hikes, a sell-off in memory chip stocks and strain in the debt behind AI spending have investors asking for proof that the investment pays off. Even a 69 per cent jump in TSMC’s third-quarter net profit did not stop regional tech hardware from falling.

In this episode of Market Focus Weekly, a podcast from The Business Times, Howie Lim speaks with Oriano Lizza, sales trader at CMC Markets, about what the shift means for Asia.

Why listen

• Spend versus revenue is the new test  Lizza says the market is moving from announcements to proof of concept. He explains why companies that can sustain demand, not just launch new products, will be favoured if rates stay high.

• Newcomers are crowding the chip race  Lizza reads CXMT’s progress in DRAM as a bellwether for new entrants, and explains why established players like TSMC and Samsung have more room to absorb rising costs.

• Oil and the Strait of Hormuz Insurance and freight costs are keeping energy prices elevated. Lizza explains how that feeds into Asian manufacturing and consumers.

• Why the Kospi is exposed Samsung and SK Hynix largely determine the index’s direction. Lizza explains why that concentration matters when leveraged bets unwind.

• A stronger dollar, heavier debt  Lizza outlines how higher rates strengthen the dollar and lengthen the road to repaying dollar debt across Southeast Asia.

This is a trader’s read on a market being asked to show its earnings. Listen now.

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Written and hosted by: Howie Lim (howielim@sph.com.sg)

With Oriano Lizza, sales trader, CMC Markets

Edited by: Howie Lim & Claressa Monteiro

Produced by: Howie Lim & Chai Pei Chieh

SEE ALSO

Singapore’s bank sell-off: A reset in expectations, not fundamentals

A podcast by BT Podcasts, The Business Times, SPH Media

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