Morgan Stanley, a U.S. investment bank, has warned that Asian tech stocks could fall by 20% in the short term due to the impact of global trade conflicts. According to Bloomberg News on the 4th, Morgan Stanley recently issued a report advising to reduce investment in Asian tech stocks, citing trade-related risks, overvaluation, and lack of growth potential in earnings. The report specifically noted that if tariffs on computer semiconductors are raised and global trade tensions reignite, the Asian tech sector could experience a 20% drop in the short term.
The analysts recommended “reducing the overall tech stock exposure in the short term and diversifying investment risks” as several negative factors converge on the sector, leading to an unfavorable risk-reward situation in the near term.
Despite a boom in artificial intelligence (AI) causing the Asian semiconductor index to rise over 65% since late 2022, Morgan Stanley pointed out that this has led to inflated valuations, and EPS (earnings per share) forecasts have not shown significant improvement.
There is particular concern regarding U.S. President Donald Trump’s announcement of additional tariffs on foreign semiconductors, referencing the sector’s sharp decline during geopolitical conflicts in 2018.
However, the report assessed semiconductor companies focused on the Chinese domestic market as relatively positive. They preferred internet companies and Chinese domestic-oriented semiconductor companies over global semiconductor firms, predicting companies like Naura Technology, SMIC, and Huahong Semiconductor, which have a high proportion of domestic sales, might benefit even amid trade conflicts.