The China Connection - 08-Jun-26

Why It Matters

The convergence of geopolitical risk, soaring oil, and a volatile AI‑driven rally reshapes Asian market valuations and highlights regulatory barriers that could affect future capital allocation.

Key Takeaways

• Middle East conflict spikes oil, fuels Asian market sell‑off.
• South Korean chip stocks tumble despite Nvidia partnership, record retail leverage.
• President Yoon calls Korean market undervalued amid steep valuation corrections.
• AI memory shortage expected to persist, supporting long‑term semiconductor demand.
• Chinese and Hong Kong investors barred from record‑size SpaceX IPO.

Summary

The China Connection aired on June 8, 2026 highlighted a perfect storm hitting Asian equity markets: escalating Israel‑Iran hostilities lifted oil prices, a sharp pull‑back in South Korean and Japanese chip‑heavy indices, and the looming record‑size SpaceX IPO that excludes Chinese and Hong Kong investors.

Oil benchmarks jumped more than $3 a barrel as Israel struck Iranian targets and Tehran retaliated, eroding market sentiment. In Korea, the Kospi fell nearly 9% and Samsung Electronics and SK Hynix each slipped over 10% despite a multi‑year Nvidia partnership, while circuit breakers halted trading. Retail investors’ margin debt hit an all‑time high, amplifying the sell‑off. Meanwhile, U.S. non‑farm payrolls and Fed‑rate expectations added volatility to global risk assets.

President Yoon Suk‑yeol, marking his first year, reiterated that the Korean market remains undervalued, a view echoed by Emmer Capital’s Manishi Rajowry who called the downturn a “perfect storm” of weak Broadcom guidance, US rate concerns and stalled Iran talks. Nvidia CEO Jensen Huang warned that memory shortages could last years, underpinning the AI‑driven demand narrative.

Analysts see the correction as a potential entry point, given that Korean and Taiwanese chips are still trading below historic earnings multiples and AI capex is expected to stay high. However, the exclusion of mainland Chinese investors from the SpaceX IPO underscores growing regulatory friction and could limit capital flows into the region’s high‑growth tech sector.

Original Description

The China Connection (10:00 – 11:00 SIN/HK), anchored by Emily Tan in Hong Kong, explores the key economic, technology, policy & business stories in the world’s second largest economy. Please note this livestream is only available in Europe and India.