As the clouds of the tariff war triggered by Trump deepen, a warning has been issued to be cautious about investments in U.S. technology stocks. The reason is that there is a high likelihood of falling stock prices. Domestic securities firms believe that China will become a new alternative for investment.
On the 4th, Choi Won-seok, a researcher from Shinhan Investment Securities, said, "It is a time when a rational response considering both short-term price adjustments and recovery processes from the perspective of stockholders is necessary for U.S. stocks," and advised, "From the perspective of new entries, it is recommended to have a portfolio strategy that responds to changes in leading stocks."
Although the technical attractiveness of U.S. stocks is high, Choi's assessment is that it cannot be guaranteed whether prices can hold up in the face of upcoming tariff risks and uncertainties. Depending on the extent and nature of tariff impacts, the speed of recovery in bounce-back cases is likely to vary significantly by stock.
Choi noted, "A technology stock-dominated portfolio preferred by domestic investors carries a high risk that needs to be endured in a fluctuating market." This is because the IT sector, centered on semiconductors and handsets, has most of its manufacturing bases in countries facing high tariffs. Thus, there are no alternative export routes.
Products that are at high risk of exposure to tariff risks are expected to see price increases. Cost shifting is occurring, which raises the possibility of declining demand.
Choi stated, "Big tech companies are also facing concerns about excessive facility investments, and the rise in semiconductor prices could further dampen intentions to invest in artificial intelligence (AI)." He added, "Caution should be exercised against excessive concentration in big tech and adjustments should be made to maintain an appropriate weight."
Choi believes that while U.S. President Donald Trump's tariff policies have focused on China, the relative attractiveness of the stock market has increased. He said, "The strengthening of China's government stimulus measures during a period of declining profits in the overall global stock market could be interpreted as a securing of relative attractiveness for scarce growth."
Concerns about U.S. tariff impositions have already been reflected in prices and the practical impact is limited. Due to the learning effect of the U.S.-China conflict that began in 2017, Chinese corporations have continuously reduced their export proportions to the U.S. The largest proportion of China's exports to the U.S. is 25%, centered on IT and electronics.
Choi pointed out that, "In practice, the share of pure U.S. exports by local IT corporations is around 5%" and added, "Local semiconductor companies are expected to benefit from accelerated localization instead." He continued, "With this year's government policy direction focused on expanding domestic demand, domestic consumption stocks are mostly escaping the impacts of U.S. tariffs, so the fundamental impact is also limited."