Korean canary in the AI coalmine
SPY•South Korean AI infrastructure company Elice Group fell nearly 30% below its IPO price on Tuesday, while the KOSPI lost nearly 4%. Investors are focusing on AI hyperscalers’ spending plans, which Goldman Sachs expects to total about $1.2 trillion next year.
1. AI spending under scrutiny
Elice Group sank nearly 30% below its initial public offering price on Tuesday, and the tech-heavy KOSPI fell nearly 4%, as a market selloff derailed some deals. The weak start came ahead of anticipated announcements from AI hyperscalers, whose combined capital expenditure is expected to reach about $1.2 trillion next year, according to Goldman Sachs.
2. Markets and earnings ahead
Investors are questioning whether returns on AI capital spending will exceed financing costs, said Ninghui Liu, head of investment strategy and research for APAC at State Street Investment Management. Netflix is expected to report slowing third-quarter revenue growth, while several established companies, including General Motors, Hasbro, Halliburton and 3M, are due to report on Tuesday.
3. Oil and economic data
Oil prices rose as uncertainty over a possible waiver of sanctions on some Russian energy exports and fresh Middle East violence raised concerns about supply disruptions. US housing starts are expected to rise to 1.305 million in September from 1.275 million in August; building permits may have edged down to 1.395 million from 1.403 million.
