Summary
Highlights
South Korea has experienced strong market swings in recent weeks, as the AI trade has come under pressure at a global level.
Markets are questioning whether AI’s high valuations are still justified as the interest-rate environment remains uncertain and IPO supply increases.
As the AI theme comes under scrutiny, investors should stay cautious and continue to favour diversification away from concentration risk.
Source: Amundi Investment Institute, Bloomberg, as at 26 June 2026. Indices rebased to 100.
In this edition
AI-related stocks have come under scrutiny, as central banks have adopted a more hawkish stance, prompting markets to reassess the sustainability of the AI trade’s valuations. This has led to some rotation into less crowded parts of the market.
The sharp rally in the heavily concentrated South Korean market since the start of the year has come under scrutiny lately, with surging market volatility amplified by erratic flows from speculative, leveraged and retail accounts.
We expect questions around the monetisation of AI investment, as well as valuations and concentration risks, to remain in focus. The melt-up in the market has been most evident among memory-chip makers, where supply bottlenecks are created by surging demand. However, scarcity will not last forever as innovation is advancing rapidly. While cash flows are very strong today, their medium-term outlook remains uncertain — these factors reinforce the need for diversification.
Key dates
30 June China PMI, US consumer confidence and JOLTS data, Japan industrial production |
1 Jul Japan Tankan, EZ CPI and PMI, US ISM Manufacturing, Indonesia CPI |
2 Jul South Korea CPI, US Nonfarm payrolls and durable goods order |
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