NVIDIA warning…'Everything rally' halted

Korea Economic Daily

Summary

Reported that due to anxiety ahead of NVIDIA's earnings announcement, prices of major assets including stocks, cryptocurrencies, and gold fell together.
Noted that a fund run by Peter Thiel selling its NVIDIA holdings and Amazon's large corporate bond issuance heightened concerns about an AI bubble.
Some experts said that given the solid fundamentals of the domestic stock market, joining the sell-off is not very beneficial.

AI bubble concerns reignite, spreading investor anxiety

'Bubble gauge' NVIDIA's results announcement unsettles financial markets

KOSPI falls 3.3%, breaking the 4,000 mark… Bitcoin falls below $90,000

The global asset market rally came to a sudden halt ahead of earnings from NVIDIA, a core company in the AI ecosystem and a 'bubble gauge.' With caution over results and the retreat of the US Federal Reserve (Fed)'s rate-cutting stance, an 'everything sell-off' (mass selling) occurred, causing stocks, cryptocurrencies, and gold prices to fall.

On the 18th, the KOSPI index closed at 3953.62, down 3.32%. For the first time in seven trading days since the 7th, the 4,000 mark was breached again. Major Asian markets also weakened, with the Nikkei 225 falling 3.02%.

Analysts said selling pressure poured in as anxiety spread ahead of NVIDIA's third-quarter results and guidance (its own outlook) scheduled for the 20th. News that a fund run by Silicon Valley titan Peter Thiel sold all of its NVIDIA holdings (worth $94 million) also shocked the market.

Amazon's plan to issue $12 billion in corporate bonds to invest in AI also added to concerns about an AI bubble. The perception is that they are continuing to invest by raising funds through debt, but it is unclear when this will lead to profits.

Growing caution within the Fed, which lowered the likelihood of a rate cut, also worsened investor sentiment. According to FedWatch, the probability of a rate hold at the December Federal Open Market Committee (FOMC) meeting was 51.0%, exceeding the 48.6% probability of a cut.

As risk-asset avoidance sentiment grew, Bitcoin also plunged. The Bitcoin price was $89,637 at 4 p.m. that day, breaking the $90,000 level for the first time in seven months. It fell 22% over three months. Safe-haven gold was also hit. The international spot gold price was $4,010 per troy ounce, and the $4,000 level is under threat.

Some argue that bubble concerns over the domestic stock market are excessive. Han Ji-young, an analyst at Kiwoom Securities, said, "Given the solid fundamentals (underlying strength), joining the sell-off in the domestic stock market is not very beneficial."

Reporter Han-shin Park phs@hankyung.com

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