Asian stocks drop despite upbeat Samsung forecast

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.73%

Asian stocks drifted lower on Tuesday, even after Samsung Electronics forecast 19-fold jump in ​second-quarter profit, while the yen initially dropped to 40-year lows amid intervention speculation.

Samsung Electronics, the world’s largest memory chipmaker, estimated April-June operating profit at 89.4 trillion won ($58.44 billion), a third straight quarter of record operating profit.

South Korean shares plunged 4.1%, while MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.73%. Nikkei slipped 1.08%.

The sharp rally in AI-related shares has likely been driven by concerns over the economy and inflation, with worries about the outlook — ​including worsening tensions involving Iran — prompting investors to seek refuge in the sector, said Toru Suehiro, chief economist at Daiwa Securities.

While it ​would be healthier for share prices to move in line with the economy and the real economy, those ⁠conditions do not change that rapidly, Suehiro said in a note, adding that markets were therefore likely to remain range-bound.

In currency markets, the yen languished near 40-year lows on Tuesday as traders grew ​emboldened to push the currency lower with no sign yet of intervention by Japanese authorities, though the risk of a surprise yen-buying move by Tokyo kept losses ‌in check.

The ⁠yen struggled on the weaker side of 162 per dollar in early Asia trade and weakened to nearly its lowest against the British pound since 2007 at 217.09, having dropped to a new low overnight.

Japan is scheduled to hold an auction of 30-year government bonds on Tuesday. If the auction is weak, government bond yields could rise further and accelerate selling of the yen, said Akihiko Yokoo, senior analyst at MUFG Bank.

Oil edged higher, but gains were limited as traders turned their attention to supply increases and demand prospects after prices hit pre-Iran war levels ​on Monday.