UBS: TECH SELL-OFF IS A POSITIONING RESET, NOT AN AI DOWNTURN UBS says last week's technology sell-off reflects investor repositioning, not a structural downturn in AI investment. The bank expects further equity gains over the next 6–12 months, supported by resilient economic activity and broader earnings growth. However, UBS warns that concentrated tech exposure and elevated expectations remain risks, recommending investors use rallies to rebalance, lock in profits and diversify.

UBS Global Research 2027 Outlook: We expect global growth to pick up to 3.5% next year, but an unusually large share of that rests on two issues: continued build-out of AI infrastructure and a resolution of the Middle East conflict.

UBS Asia S&T desk update Korean Memory Selling Intensifies; Buying In TSMC, Japan Industrials; Financials Lack Bid Japan surprisingly constructive: Overall flows are modestly net bought despite the sharp market selloff, with Japan dominating early regional turnover. The bid is concentrated in industrials, particularly automation and selected diversified capital goods, rather than generic dip-buying. Japanese technology also finding buyers: Outside memory, where Kioxia remains less convincing, technology hardware has turned net bought after being 2:1 sold Thursday. AI hardware and semiconductor equipment names are seeing demand into weakness, suggesting selective bottom-fishing rather than wholesale tech capitulation. Korea shows the clearest capitulation: Selling remains acute in both SK Hynix (4:1 better to sell) and Samsung Electronics (5:1 better to sell). Taiwan is less extreme, with meaningful support from long-only investors in TSMC helping absorb supply and stem broader outflows. Little evidence of a classic defensive rotation: Consumer staples are modestly better bought but represent a very small share of desk flows. More importantly, financials are failing to attract defensive flows, with Japanese banks and insurers heavily offered and Hong Kong/China insurers also seeing broad outflows. AIA is the notable exception. Australian banks are the relative refuge, while Singapore bank flows remain mixed. China’s domestic semiconductors remain differentiated: Selected domestic chip names continue to attract buying despite the regional rout. CXMT is the exception, failing to participate in the domestic bid and seeing outflows that are more consistent with the weakness across Korean and Japanese memory.