By Gregor Stuart Hunter
SINGAPORE, June 3 (Reuters) – Gains for AI chipmaker stocks can continue, but risks of a pullback are growing, Goldman Sachs said in a note on Wednesday.
• “We lean into North Asia where earnings growth is strongest,” wrote analysts including Timothy Moe, chief Asia-Pacific equity strategist and co-head of macro research.
• “Stocks that are delivering growth in earnings, or revenues in the case of earlier stage industries, are being rewarded, while those that are falling short on growth are being punished or ignored.”
• Goldman raises its recommendation on Taiwan to overweight and boosts its target price on South Korean shares.
• The investment bank cuts Hong Kong-listed H-shares to market weight, remaining overweight on mainland-listed A-shares
Index New Old Upside from
target target current level
(12
month)
MSCI Asia Pacific 1,080 990 17.2%
ex-Japan index
TAIEX 51,000 45,000 12%
KOSPI 12,000 9,000 36.3%
• The MSCI Asia Pacific ex-Japan index is up 27% year-to-date, but excluding South Korea and Taiwan it is down 4%, the note said.
• “This performance disparity, which is over 160% between Korea and Indonesia, can largely be explained by the twin axes of energy supply shock sensitivity and technology sector exposure”, the note said. “North Asia has greater buffers to the Iran war energy shock and is the epicenter of the AI trade, whereas South Asia is more exposed to energy price pass-throughs and has little listed AI representation.
• Goldman warns of the narrow breadth of the rally and increased speculation, citing sharply higher assets under management in leveraged ETFs.
• “Put spread collars in Korea and Taiwan can hedge correction risk after strong gains and signs of increased speculation,” the analysts said.
(Reporting by Gregor Stuart Hunter; Editing by Jacqueline Wong)
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