China's AI Rally Lifts Tech Stocks While Korea's Chip Giants Extend Losses

Asian markets started the week on a mixed note as investors rotated within the AI sector, boosting Chinese technology shares while extending the selloff in South Korea's chipmakers.

The divergence highlights growing uncertainty over AI valuations, even as enthusiasm for new breakthroughs remains strong.

Chinese equities outperformed regional markets after startup Moonshot AI unveiled its latest large language model, Kimi K3, a lower-cost competitor to leading Western AI models.

The announcement lifted expectations that China's AI ecosystem could become more competitive, driving gains across technology and semiconductor stocks.

The Shanghai 50 Composite rose 3%, the CSI 300 gained 2.0%, while Hong Kong's Hang Seng Index climbed 2.5%.

Semiconductor shares also rallied, with SMIC and Hua Hong Semiconductor posting strong gains as investors positioned for stronger demand across China's AI supply chain.

In contrast, South Korea's KOSPI fell nearly 4%, extending losses after last week's global pullback in AI-related stocks.

Heavyweight chipmakers Samsung Electronics and SK Hynix each dropped around 4% as investors continued to reduce exposure to richly valued AI names.

The selloff reflects broader concerns that intensifying competition in artificial intelligence could make it harder for leading technology companies to justify premium valuations.

Meanwhile, rising geopolitical tensions in the Middle East continued to support oil prices and kept investors cautious ahead of upcoming central bank meetings.

Higher energy prices could complicate the inflation outlook, reducing expectations for aggressive monetary easing in the months ahead.

For now, the AI trade is showing clear signs of becoming more selective.

Rather than moving away from artificial intelligence altogether, investors appear to be rotating toward companies and markets they believe offer the next phase of AI-driven growth, while taking profits in stocks that have already enjoyed substantial gains.