Asian stocks rally as chipmakers rebound

There was sharp reversal from this week’s technology-led selloff, with South Korea once again setting the tone for trading

Asian stocks rallied on Friday, led by a sharp rebound in semiconductor shares, as investors looked past renewed Middle East tensions to refocus on the long-term artificial intelligence investment theme following new signs that chipmakers are preparing for another wave of spending.

The gains came despite another escalation in the Middle East after latest U.S. strikes on Iran drew retaliatory attacks against U.S., keeping risks around the Strait of Hormuz and world oil supplies firmly in focus.

Investors instead focused on signs that the AI investment cycle remains intact after another week of heavy capital spending announcements from major chipmakers.

There was sharp reversal from this week’s technology-led selloff, with South Korea once again setting the tone for trading.

The KOSPI soared 4.2%, clawing back part of this week’s sharp losses after officially entering bear-market territory on Thursday, although the benchmark remained on track for a weekly decline of over 6% so far.

Samsung Electronics Co Ltd rebounded 4.9% after leading this week’s selloff, while SK Hynix Inc added 1.5%.

Japan followed South Korea higher, with the Nikkei 225 jumping nearly 2%, trimming its weekly loss to around 0.9%, while the TOPIX rose 0.7%. Sentiment was boosted after reports that Japan’s Government Pension Investment Fund (GPIF) is considering increasing its allocation to domestic equities, providing a new tailwind for the broader market alongside renewed buying in technology stocks.

Meanwhile, this week’s central bank meetings highlighted diverging policy paths after Bank Negara Malaysia kept its overnight policy rate unchanged at 2.75%, while the Reserve Bank of New Zealand raised its official cash rate by 25 basis points and signalled further tightening may be needed.

Focus now shifts to a busy week of catalysts, with China’s June trade figures, second-quarter GDP, retail sales and industrial production, Singapore’s advance GDP estimate, India’s June inflation report and the Bank of Korea’s policy meeting expected to shape sentiment across markets.

Hong Kong’s Hang Seng jumped 1.8% to its highest level since June 17, while mainland China’s Shanghai Shenzhen CSI 300 and Shanghai Composite rose 0.2% and 0.4%, respectively, as investors continued positioning for further policy support from Beijing ahead of next week’s trade data. FTSE Straits Times Singapore added 0.5%.