Korean stocks are riding a "roller coaster"! Funds are no longer all in AI, lay out these directions
The South Korean stock market has experienced violent fluctuations and has been on a "roller coaster", but the scale of foreign capital withdrawal may have exceeded US$100 billion. Korean stocks are having an impact on global stock markets. Although it is not enough to trigger an international financial crisis, the vigilance of domestic funds has increased significantly. Entering the second half of the year, institutional investors are increasingly reluctant to go ALL IN into AI and are paying more attention to risk balance and hedging potential risks in the AI sector. Next, the semi-annual report and the third quarterly report are the key periods for performance realization. Some funds have already flowed into Hong Kong technology stocks, securities firms, innovative drugs and other fields in advance, looking for structural opportunities in the second half of the year. Funds are no longer fully invested in AI In the past month, South Korea's stock market has been on a roller coaster with violent fluctuations, and the KOSPI index has triggered circuit breakers many times, reflecting the market's repeated trade-offs between the continued strong demand for artificial intelligence (AI) and the risk of overcapacity in the industry in the future. At the same time, AI trading, which rose globally in the first half of the year, has also shown a trend of simultaneous adjustments, and some funds have taken profits. "We have repeatedly reminded that July and August may be a volatile period for AI trading." Liu Gang's team reported that US AI transactions will generally follow the rule of "two strong quarters and one weak quarter" starting from 2023, and every time the market worries about bubbles, it is during the performance period. This AI transaction has been going on for almost two quarters since the beginning of the year. With the second quarter performance period approaching, it is not surprising that the market has entered a period of entanglement and is waiting for new catalysts. Especially for Korean stocks, which have "a large number of retail investors, high leverage, and high congestion", the fluctuations are even more significant. A Beijing-based private equity investment director bluntly told a Chinese reporter from a brokerage, "Adjustments in a bull market can also be fatal." From a valuation perspective, the dynamic price-to-earnings ratio of the Korean stock market is even lower than the bottom valuation of the financial crisis in 2008. However, in the face of huge floating profits in the early stage, deleveraging may continue. This situation is also a huge warning signal for the domestic AI market funds. The funds may not be bearish on the AI industry chain, but they are just unwilling to go ALL IN. Funds need to be rebalanced and dispersed into various growth themes to reduce risks. In fact, in the first half of 2026, the AI sector, especially the computing hardware direction, is the main line of the global market, and a large amount of funds are concentrated in this direction. Under the siphon effect of funds, the existing funds are huge. The market estimates that the total scale of existing funds in this field will exceed 500 billion US dollars. Once funds are rebalanced, the fluctuations caused by adjustments will also be huge. A new direction for balance is emerging Where did the money from the sale go? In addition to Hong Kong stocks and other sectors, innovative drugs are the first focus of some private equity institutions. From the third quarter of 2025 to June 2026, the Dongcai Hong Kong Innovative Drug Index has retraced nearly 40% from its high point, and the A-share Innovative Drug Index has also retraced nearly 20%. Since the valuations and institutional positions of innovative drugs are both at relatively low levels, it has attracted a lot of funds to relocate. Among them, the Sci-Tech Pharmaceutical ETF China (588130), which closely follows the performance of the Sci-Tech Bio-Index, saw its fund shares soar from 89.58 million on June 22 to 260 million on July 14. The capital inflow was significant in the short term, with an increase of nearly 20% in the range. The latest scale reached 274 million yuan, a new high in the past year. Among the top ten heavyweight stocks of the fund, etc. are the core carriers of the logic of going overseas. When the market gradually realizes that these assets should refer to "global pricing" rather than "China discount", there is room for systematic upward revision of the valuation center of innovative drugs. Chen Yu, general manager of Shennong Investment, emphasized that every year in China, a large number of innovative drugs are advanced to the clinical or marketing application stage, among which there are always several varieties with international influence. The China Engineer Dividend will be fully reflected in the field of innovative drugs. Unlike some high-tech industries, the field of innovative drugs has global cooperation attributes. Chinese companies are highly competitive in terms of R&D costs, output efficiency, and pipeline advancement speed, and their advantages are rapidly improving. At present, the logic of China’s innovative drugs going overseas is undergoing structural changes. The traditional external licensing model is mainly based on "one-time down payment + milestones", which is essentially "selling out" overseas rights and interests. Since 2026, the overseas model is accelerating to upgrade to a global joint research model - joint development, joint commercialization and profit sharing with multinational pharmaceutical companies.
Puyin AXA pointed out that in January 2026, CSPC and AstraZeneca reached a US$18.5 billion cooperation to jointly develop eight innovative weight management projects; in May, It reached a US$15.2 billion strategic cooperation with BMS, with 13 early-stage projects covering the three major fields of oncology, blood and immunity. In the same month, Innovent Biologics reached a US$10.5 billion deal with Pfizer, and 4 core assets among the 12 oncology projects adopted a global joint research model. The deepening of this "profit sharing" model means that the bargaining power and voice of Chinese innovative pharmaceutical companies in the global value chain are systematically improving. In terms of scale of overseas expansion, according to data from the Insight Pharmaceutical Transaction Module, in the first half of this year, Chinese companies reached a total of 86 overseas license-out cooperations, a 34% increase over the same period last year; the total disclosed transaction volume reached US$97.625 billion, a year-on-year increase of 40%. Changes on the industry side are positive. Gu Ruofei, founder of Panyao Asset, believes that the Hang Seng Healthcare Index and A-shares All are in the low valuation range in the past five years. A large number of high-quality innovative pharmaceutical companies with solid pipelines and clear commercialization paths have seen their share prices fall back deeply to levels that provide sufficient reverse protection. From an attribute perspective, innovative drugs are naturally in line with the current financial aesthetics. High R&D barriers, global growth logic, and underlying technology drive—innovative drugs are essentially biomedical technologies and are highly consistent with the market’s preference for hard-core growth in funding. Once high-tech technology funds enter the profit-taking cycle, innovative drugs will be the core direction. Source: Brokerage China (Source: Databao)
Puyin AXA pointed out that in January 2026, CSPC and AstraZeneca reached a US$18.5 billion cooperation to jointly develop eight innovative weight management projects; in May, It reached a US$15.2 billion strategic cooperation with BMS, with 13 early-stage projects covering the three major fields of oncology, blood and immunity. In the same month, Innovent Biologics reached a US$10.5 billion deal with Pfizer, and 4 core assets among the 12 oncology projects adopted a global joint research model. The deepening of this "profit sharing" model means that the bargaining power and voice of Chinese innovative pharmaceutical companies in the global value chain are systematically improving. In terms of scale of overseas expansion, according to data from the Insight Pharmaceutical Transaction Module, in the first half of this year, Chinese companies reached a total of 86 overseas license-out cooperations, a 34% increase over the same period last year; the total disclosed transaction volume reached US$97.625 billion, a year-on-year increase of 40%. Changes on the industry side are positive. Gu Ruofei, founder of Panyao Asset, believes that the Hang Seng Healthcare Index and A-shares All are in the low valuation range in the past five years. A large number of high-quality innovative pharmaceutical companies with solid pipelines and clear commercialization paths have seen their share prices fall back deeply to levels that provide sufficient reverse protection. From an attribute perspective, innovative drugs are naturally in line with the current financial aesthetics. High R&D barriers, global growth logic, and underlying technology drive—innovative drugs are essentially biomedical technologies and are highly consistent with the market’s preference for hard-core growth in funding. Once high-tech technology funds enter the profit-taking cycle, innovative drugs will be the core direction. Source: Brokerage China (Source: Databao)