EBC Markets Briefing | Asian tech stocks slide amid signs of buying fatigue

Markets in Asia tumbled on Tuesday as AI frenzy was cooling. Shares of chipmaker Changxin Technology Group soared in their debut, making CXMT the most valuable China-listed company.

Resilient exports cushioned weak domestic demand to sustain solid, though slower, industrial profit growth in China, underscoring an uneven economic recovery despite consumption-boosting efforts.

Industrial profit growth eased to 15.1% in June, while industrial output grew 5.3% - the fastest pace since March. Attention is now turning to the Politburo's ‌upcoming meeting.

Since manufacturing and exports remain highly resilient, Beijing is increasingly unlikely roll out aggressive economic stimulus.

Chinese daily stock turnover has dropped to the lowest level in over three months, as investors shun the nation's technology sector, in line with the recent sell-off in Japan and South Korea.

The equity market interventions face a looming test as veteran investor Michael Burry boosts short bets on AI stocks and Moody's flags rising debt risks among tech hyperscalers.

EBC Financial Group analyst says, China's A50 Index entered a distribution phase following a minor uptrend that peaked near 15,264. The immediate bias is heavily bearish, so a retest of 14,400 may be in the cards.

Asset Recap

As of market close on 27 July, among EBC major products, Workday shares led gains as enterprise software stocks staged a coordinated rebound – rotation from AI-chip names to other sectors.

China has begun manufacturing domestically developed immersion ​deep ultraviolet lithography machines, a key tool long dominated ‌by ASML. The machines are expected to be delivered this year.

The price of oil has fallen sharply on hopes that a pause in attacks between the US and Iran could help to de-escalate the conflict. However, the Strait of Hormuz is yet to fully reopen.

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