Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) leaks + semiconductor tariff threats drag down chip stocks and emerging market stocks.

Due to the threat from US President Trump to increase tariffs on the semiconductor industry, as well as the leakage of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR 2nm chip process causing panic among investors, semiconductor stocks dragged down the benchmark index of emerging market stocks. The MSCI Emerging Markets stock index fell by 0.2%, primarily due to the decline in the stock price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. In terms of currencies, Asian currencies performed poorly, while the South African Rand and Mexican Peso rose. Apart from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the stock index showed mixed gains and losses. Chinese e-commerce stocks rose, with Tencent leading the gains, while South Korean chip manufacturers saw a decline. After experiencing seven months of increase (the longest rally since 2017), investors are re-evaluating the prospects of emerging market stocks. Trump's tariff measures have damaged economic growth in developing countries, many countries have not reached agreements, and some countries (such as India) even face the threat of punitive tariffs. Despite a weak consumer economy and ongoing political tensions, expectations for the Federal Reserve to ease monetary policy have improved slightly, providing a somewhat positive backdrop for the market. Trading activity in the market is light due to the summer holiday season in the Northern Hemisphere. As of press time, trading volume for the MSCI Emerging Markets stock index was down 24% from its 30-day average. The stock price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR fell by 2.2% in Taiwan, marking the largest drop since June 23, after prosecutors arrested six individuals suspected of stealing the company's trade secrets. This triggered an investigation into a potential national security vulnerability involving key figures in the global tech industry. Meanwhile, the stock prices of Samsung Electronics and SK Hynix in Seoul both fell by at least 1.6%. A series of negative news is weighing on the chip industry. Apart from the leaked secrets involving Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, investors are also waiting for further actions from Trump after he announced that the US will impose tariffs on semiconductor imports in "about a week." Global profit news also dampened market sentiment. In the US, Super Micro Computer, Inc. (SMCI.US) saw a sharp decline in its stock price after lowering sales expectations, GFS.US saw a sharp drop in its stock price for not meeting expectations, and AMD.US warned that the outlook for its return to the Chinese market is unpredictable. For those interested in technical indicators, the decline in emerging market stocks occurred as the MSCI Emerging Markets stock index monthly relative price index reached 68, close to the so-called oversold level of 70 before past sell-offs. The index has dropped by about 2% from its peak on July 24. Ukrainian sovereign dollar bonds had the largest increase in Bloomberg's Emerging Markets Sovereign Total Return Index. Investors are watching for the next steps in the Russia-Ukraine war, with Russia considering concessions, including suspending airstrikes. Meanwhile, the country has appointed a head of the Ukrainian Economic Security Bureau, meeting the requirements of the International Monetary Fund (IMF). Indian local currency bonds fell as the country went from being close to reaching a trade agreement with the US to being targeted by Trump's harshest tariff measures, including additional tariffs on India for buying oil from Russia. The yield on Indian 10-year bonds rose 7 basis points to 6.40%. The Indian central bank kept rates unchanged amid mild inflation expectations, leading to a rise in the Indian Rupee. The South African Rand and Mexican Peso both performed well in the currency market. In Touch Capital Markets' senior currency analyst Piotr Matys says the Rand's rise is being driven by increased expectations of a rate cut by the Federal Reserve. He says, "The Rand is the biggest beneficiary of the market fully digesting the expectation of a 25 basis points rate cut by the Fed at the next meeting in September. The disappointing US non-farm payrolls data and the increasing political pressure from President Trump on Fed Chair Powell to cut rates have led to this."