Throughout East Asia, Palantir Has Prompted a Selloff
South Korea, Taiwan and Japan have all seen stocks close at recent records but rely on a handful of outperformers.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Coming off of record highs, East Asia’s tech stocks are taking the selloff in Palantir Technologies (PLTR) stock on the chin on Tuesday.
Screens are red across the region on Tuesday, with South Korea’s pacesetting market down 2.4%. The Kospi closed at an all-time high of 4,219 on Monday, thanks to a spike in its chipmaking heavyweights.
South Korean shares have outpaced all other Asian markets this year, with the benchmark Kospi up a heady 71.8% in 2025. They were driven to new all-time highs on Monday with benchmark heavyweight HXSCL SK Hynix (KR:000660) up 10.9% for the day, after Nvidia (NVDA) deepened its partnership with the Korean chipmaker, the second-largest component on the Seoul exchange.
Scaling the Summit
Nvidia also extended its relationship with Samsung Electronics (KR:005930), the largest Korean listing by market cap. Both the Hynix parent SK (KR:034730) and Samsung are due to build semiconductor factories fueled by artificial intelligence stemming from “at least” 50,000 Nvidia graphics processing units (GPUs) to direct production. Samsung shares rose 3.2% in response on Monday.
The impetus was the visit of Nvidia CEO Jensen Huang to Korea for the APEC Summit on its southeast coast. Huang also announced deals with Hyundai Motor to use 50,000 Nvidia GPUs and Naver NHNCF (KR:0345420), South Korea’s equivalent of Google (GOOGL) , to use 60,000 GDPUs to power its cloud-computing and Internet services.
On Tuesday, Samsung shares are down 5.6%, and Hynix has corrected 5.5%. Hyundai Motor shares looked set to make a run at their June 2024 all-time high close, but have eased back 5.3% today.
Circular Sales Arrangements
The South Korean deals mimic some of the circular Nvidia agreements we’ve seen in the United States. Nvidia sells chips to chipmakers so they can make and sell more chips, leading to further demand for the Korean companies to buy more Nvidia chips.
Is Monday’s relative disappointment from Palantir going to puncture the tech momentum? PLTR’s earnings beat analyst expectations, but not by enough to impress investors. So we see the shares down 6.6% in early trade on Tuesday.
As my colleague Rev Shark was quick to point out, Palantir shares are up more than 150% this year (now sitting on a 157.0% gain to be precise), and are ripe for a “sell on the news” correction.
He pointed out that Monday was only the second time ever that Nasdaq has hit an all-time high with market breadth that’s more than two-to-one negative.
Handful of Stocks Dominate Asian Trade
In other words? A handful of stocks like Palantir are driving the market forward while many stocks correct.
We can attribute South Korea’s outperformance this year to similar trends. The markets in South Korea and Taiwan have risen to record highs on the backs of chipmaking behemoths that account for an outsize proportion of the total market.
Samsung Electronics accounts for some 20% to 25% of the entire market capitalization in Seoul. Hynix accounts for another 10% to 12%. Samsung shares have essentially doubled this year, up 96.4%, as investors reward its efforts to recover from a slow start in producing high-end AI chips. Oh, and Hynix? Up just the 242.3% gain that means it has more than tripled in 2025.
Taiwan’s stock market hit an all-time closing high last week. It is following the fortunes of market heavyweight Taiwan Semiconductor Manufacturing Co. (TSM) (TW:2330), up 41.3% this year. TSMC makes up around 27% of the total market cap in Taiwan.
TSMC shares are easing back a slim 0.3% on Tuesday. But TSMC, with a commanding 70% or so of the world chip-foundry production, doesn’t really care who is designing or ordering the chips, as long as they continue to do so.
Breadth of Fresh Air
Japanese stocks are also coming off their highs. After a holiday for Tokyo trade on Monday, the blue-chip Nikkei 225 is down 1.7% and the broad-market Topix is off 0.7% on Tuesday. But the Nikkei, with a greater weighting to multinationals, is notching gains this year of 31.0%, while the domestic-heavy Topix is up 20.1%.
Japan’s stock market is far broader than the markets in South Korea and Taiwan. Toyota Motor (TM) (T:7203) is the largest Japanese listing, at $265 billion, but only around 5% of total Tokyo market cap. The automaker responds to trade tensions more than tech trends.
You’ve also got banks, clothing stores like Uniqlo parent Fast Retailing (FRCOY) (T:9983), and entertainment groups such as Sony (SONY) (T:6758) and Nintendo (NTDOY) (T:7974) to balance the tech weighting. Nintendo, up 42.7% in 2025, in particular looks well set heading into year end, with strong sales of the new Switch 2 console leading it to hike its profit forecast by 16%.
We can still see the effects of the AI boom, however. SoftBank Group (SFTBY) (T:9984) ranks just behind Toyota in terms of market cap, around $250 billion, with founder Masayoshi Son directing a massive AI drive for what’s essentially a tech-investment portfolio. Chip-testing equipment maker Advantest (ATEYY) (T:6857), up 134.1% this year, and chipmaker Tokyo Electron (TOELY) (T:8035), up 42.8% for 2025, also rank among the top 10 Nikkei components.
I feel far more secure that the Tokyo market could ride out any tech turbulence. The markets in South Korea and Taiwan will ride the AI wave with far greater potential for volatility. Their overweighting toward semiconductors has served them well in 2025. But as we see with Tuesday's selloff, investors may now be looking for reasons to sell.
At the time of publication, McMillan was long TSMC.
