(Bloomberg) — The hard-versus-soft divergence in Asian tech shares looks set to widen next year as internet stocks crumble under the burden of regulation, valuation and rising inflation.
The Bloomberg Asia Pacific Communications Index slumped to a 18-month low on Friday, dragged down by Chinese internet stocks on the risk of U.S. delistings. Sentiment also took a hit as ride-hailing giant Grab Holdings Inc. promptly fell more than 20% on its trading debut over concerns about the impact of the omicron variant on Southeast Asian markets.
Conversely, Asia’s semiconductor shares were on track for their fourth week of gains in five on upbeat outlooks this month from a number of key chip companies. The gauge has climbed 6% this year, compared to a 24% slump for its internet-heavy peer.
Investors are balking at nosebleed valuations for stocks sensitive to an environment where surging inflation has raised the risk of Federal Reserve hikes. In India, Paytm’s overpriced IPO debacle has hurt prospects for other fintech listings like One Mobikwik Systems Ltd.
Meanwhile, China’s $1.5 trillion tech rout looks poised to deepen, after the U.S. unveiled a plan for new disclosure requirements that may lead to more delistings following that of Didi Global Inc.
On the other hand, strong demand and government investment in the semiconductor industry is expected to boost chip stocks including those in the lagging memory market.
Chip Shares in Asia May Follow Surging U.S. Peers: Taking Stock
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