Global asset managers cut their stakes in Samsung Electronics, SK Hynix and TSMC

Global asset managers are reducing their exposure to Asian semiconductor stocks such as Samsung Electronics, SK Hynix and TSMC. This is because the three companies make up about of investment portfolios, which has heightened concerns about concentration.29 of the MSCI emerging markets index.

Managers including Fidelity International and BlackRock have started reducing their weightings. Caroline Shaw, a multi-asset portfolio manager at Fidelity, said it was an indicator that could help gauge whether index concentration and leverage expansion are excessive.

The three companies have benefited from the race among U.S. hyperscale data center operators to secure AI chips. Driven by higher prices amid a supply shortage, their market capitalizations have swelled over the past 6 period by about 2fold.

The MSCI Emerging Markets Index has risen by about 19% so far this year. However, recent profit-taking has emerged, and funds have shifted to traditional emerging-market markets with less exposure to AI semiconductors, so the index has fallen from its peak.

According to the article, foreign investors have sold about 1,000hundred million dollars’ worth of Korean stocks so far this year. Some investors were reported to have sold after reaching the usual limit for portfolio concentration.

This selling is increasing volatility in Asian semiconductor stocks. Changes in capital flows and concentration within the index could affect investment flows going forward.