Summary
- As the US stock market enters a correction phase, a money move to China and Europe is being observed.
- The New York Nasdaq index is plunging, centered on overvalued tech stocks, and some funds are reportedly moving to Chinese AI technology and European economic stimulus measures.
- Societe Generale reported that Chinese tech companies are showing growth in contrast to the American Magnificent 7.
'Tech stocks hit' Nasdaq in correction phase
Although US President Donald Trump postponed tariffs on a significant portion of Mexican and Canadian products for one month on the 6th (local time), it failed to alleviate market anxiety. The New York stock market plunged, and there are observations that some funds are moving to China and Europe, which recently announced economic stimulus measures.
The Nasdaq index fell 2.61% on the day, dropping more than 10% from its peak recorded in mid-December last year. The market views this as entering a full-fledged correction phase. Tech stocks, which have been subject to overvaluation concerns, took a direct hit. Nvidia and Broadcom fell 5-6%, while Marvel Technology plummeted nearly 20%. Dave Mazza, CEO of Roundhill Investments, analyzed that "investors are readjusting their growth outlook as tariffs and inflation figures, rather than the future growth potential of artificial intelligence (AI), are driving the market."
Funds concentrated in US high-tech companies are showing signs of diversifying into Chinese technology companies. Societe Generale referred to Chinese companies Alibaba, Tencent, BYD, Xiaomi, SMIC, JD.com, and NetEase as the '7 Giants' competing against the American 'Magnificent 7' large tech stocks, reporting that their stock prices have risen more than 40% this year. This price surge is attributed to expectations for Chinese AI technology following the release of DeepSeek, and policies announced at the National People's Congress to expand R&D investment in technology companies. According to Reuters, the outflow of funds from China-related funds since Trump's election last November reversed in early last month, with $3 billion (approximately 4.3 trillion won) flowing in by the 5th.
Funds also poured into European stock markets, which have forecast large-scale economic stimulus measures. The Stoxx 600, Europe's representative stock index, has risen 8.09% this year. After Friedrich Merz, leader of Germany's Christian Democratic Union, announced major defense spending, the Stoxx Aerospace & Defense ETF jumped 41.49%.
However, regarding the New York stock market decline, President Trump said he "doesn't look at the market." This suggests he won't be concerned about market declines. This is a change from his past attitude of considering the stock market as a "daily report card." President Trump emphasized that "these (tariff) policies may affect the market, but they are measures to strengthen the US economy in the long term."
Kim In-yeop reporter inside@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
