00:00Let's bring in Ken Wong, Asian equity portfolio specialist at East Spring Investments.
00:04Ken, really great to have you with us.
00:06I mean, we saw the volatility in the U.S. market, not only reacting to what the Fed did,
00:12but also to all of these big tech earnings.
00:15The fact that we have AI fuel demand, but at the same time this concern about the AI infrastructure build
00:22-out,
00:22how does that vote for Asian markets when we continue to see this on-and-off sell-off?
00:28Yeah, I think the fact is that suppliers are generally seeing quite a bit of profit-taking this month, as
00:33expected.
00:34Now, overall, when we look at whether it be semiconductor companies, whether it be memory storage companies,
00:39or even electronic component companies, nobody has actually been immune to the sell-off.
00:44But generally speaking for us, when we're looking at the Asia tech market as a whole,
00:48we feel that electronic component makers still do have better opportunities
00:52because when we look at going forward, whether it be ASPs, whether it be specifically margins,
00:56because of a lack of competition for electronic components,
01:00there's going to be pockets and areas where now we would expect for some investors
01:03to really start to bottom fish and start looking for some opportunities,
01:07especially given the correction that we've seen so far in July.
01:12But you're actually underweight when it comes to semiconductors and memory. Why?
01:18Yeah, the fact is that we've been underweight semiconductor as well as memory now for the last six months.
01:23Overall, in our view, we think that electronic components are actually the better way to go
01:28because generally speaking, when we look at the average sales price,
01:31or specifically when we expect for overall margins,
01:33we expect things within the semiconductor as well as especially within the memory space
01:37to gradually start to weaken. The fact is that there is going to be a lot more excess capacity,
01:42which is going to be out in the marketplace, especially in 2027.
01:46The fact is that, yes, while we are continuing to see a rise in, for instance, DRAM or NAND memory
01:52prices,
01:53generally speaking, when we look at the change in terms of the overall rise in prices in memory,
01:58especially into 2027, that is probably going to soften a bit more.
02:02And this is why you're seeing that sell-off right now, in particular for July,
02:06especially when hyperscalers are potentially going to have to reduce specifically some of their AI cap
02:11expense in 2027, potentially, then there is going to be actually a notion in terms of what we're going
02:17to have to look at in terms of opportunities.
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