Traders Weigh 'Buy & Dip' Opportunities Amid Stock Market Losses

Investors and analysts are positioning themselves in response to the steep losses in Asian technology stocks, triggered by a $279 billion sell-off in Nvidia Corp. that sent shockwaves through the semiconductor sector. The sharp decline in Nvidia’s shares led to a broader market rout, causing significant losses for major Asian semiconductor and equipment manufacturers like SK Hynix Inc., Taiwan Semiconductor Manufacturing Co., and Advantest Corp. This sell-off presents a critical juncture for investors who have reaped substantial gains from chip stocks in recent years.

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As the market turmoil unfolded, the VIX Index, often referred to as Wall Street’s “fear gauge,” surged on Tuesday, signaling heightened anxiety among investors. This week holds additional sources of potential volatility, including the upcoming U.S. jobs report on Friday. This report is particularly crucial, as investors are concerned that a potential slowdown in the U.S. economy could have ripple effects on Asian chip suppliers.

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Here’s what various investors and analysts are saying about the current market situation:

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Jung In Yun, CEO at Fibonacci Asset Management Global Pte. in Singapore

Jung remains optimistic despite the recent market volatility, viewing each sell-off as a buying opportunity. “Although we expect the volatility spike to revisit more often for some time in the future, we maintain our view that each sell-off is a buying opportunity. In this regard, we expect to see the broad equity market in Asia rising very quickly, once again,” he said. Jung believes concerns about a peak in AI demand are overstated and expects the demand for AI and its supporting infrastructure to remain robust through the first half of next year. He suggests investors should focus on stocks that haven’t participated in the recent rally, particularly those with ties to AI, such as Samsung Electronics Co.

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Andrew Jackson, Strategist at Ortus Advisors Pte. in Singapore

Jackson downplays the severity of the current market downturn, comparing it to a “storm in a tea cup” following August’s turbulence. “It feels like we are not getting a repeat of the intense panic selling like last time,” he remarked. Jackson sees opportunities to buy on the dip, particularly in companies like Micronics Japan Co. and Advantest, which have minimal exposure to China.

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Charu Chanana, Head of FX Strategy at Saxo Markets in Singapore

Chanana is more cautious, noting that the market is still reeling from the “September curse” and the memory of an early August sell-off triggered by a jobs report. With another jobs report due this week, she observes that traders are currently de-risking. “The September curse comes together with memories of an early August selloff that came on the back of jobs report. And we have another jobs report coming this week, so traders are taking risk off the table for now,” she said, adding, “I would be rather cautious here.”

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Randy Abrams, Head of Taiwan Research at UBS Global Asset Management in Taipei

Abrams highlights growing investor uncertainty about the return on investment (ROI) from AI-related stocks, especially as macroeconomic data softens. “Now investors are starting to question if the ROI is coming through. They are a bit nervous when they see some of the macro data is not as strong,” he explained. Despite these concerns, Abrams believes that supply chain insights and spending by major cloud providers suggest continued investment in AI, which is why some investors recently bought the dip.

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An Hyungjin, CEO at Billionfold Asset Management Inc. in Seoul

An is less optimistic about the current dip, particularly for tech stocks reliant on the U.S. economy. “It doesn’t seem to be an opportunity to dip buy tech stocks,” An remarked. Given South Korea's dependence on the U.S. economy, any slowdown there could exacerbate market jitters. An advises investors to seek relative safety in Korean companies focused on domestic demand rather than those dependent on U.S. exports.

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Dayeon Hong, Multi-Asset Portfolio Manager at Shinhan Asset Management Co. in Seoul

Hong sees the current market decline as a partial reversal of the quick rebound following the sharp drop in August. “Stock markets have rebounded quickly after declining sharply in August so what we see today is partly a reversal of that rebound,” she noted. With potential volatility on Friday, Hong suggests that investors are moving to defensive positions preemptively.

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Kohei Onishi, Senior Investment Strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo

Onishi views the current market decline as a natural reaction to the significant drop in U.S. stocks. “Today’s fall is just a reaction to big drop in New York shares overnight,” he said. He expects the markets to remain range-bound leading up to the Federal Open Market Committee (FOMC) meeting on September 17-18, with a potential rally in share prices once uncertainties are resolved, likely toward the end of the year.

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In summary, while the recent sell-off in Asian tech stocks has caused concern, opinions among investors and analysts vary. Some see it as a buying opportunity, while others advise caution amid ongoing market uncertainties. The upcoming U.S. jobs report and the FOMC meeting will be key events to watch, as they could significantly influence market direction in the coming weeks.

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