The AI super bull market enters the "stress test" phase! As the stock and exchange rates of Japan and South Korea diverge to an extreme extent, record leverage will push AI semiconductors towards the eye of the stock market storm.

The deputy minister of finance of South Korea stated on Thursday that Seoul is closely communicating with Japan and other key allies regarding the continuous sharp depreciation of the Korean won in the foreign exchange market. He warned that there is a significant divergence of the Korean won relative to economic fundamentals. In the South Korean market, there is a frenzy driven by AI semiconductor stocks, with the benchmark Kospi index skyrocketing by over 100% at one point this year. The positions of the two major storage chip giants in the Korean stock market, SK Hynix and Samsung Electronics, have become increasingly crowded and leveraged. On the other hand, the Korean won has depreciated by 7.4% against the US dollar this year, hovering near a 17-year low. The simultaneous significant depreciation of the Korean won and the Japanese yen, with the Korean won approaching a 17-year low and the Japanese yen at a 40-year low, has led to a more pessimistic outlook for the long-term prospects of the Japanese and Korean stock markets. Additionally, market news indicating that Meta, Facebook's parent company, is preparing to lease/sell idle AI computing power infrastructure has raised concerns about an oversupply of AI computing power, severely impacting AI computing power investment themes. The global AI super bull market seems to be transitioning from "fundamental expansion trading" to a systemic stress test phase characterized by "currency macro exchange rate pressure related to AI computing power chains in Japan and Korea + leverage market structure + record-high position crowding." In Japan, the yen and the Korean won can be considered as "AI computing power chain currencies" and are exhibiting extreme "stock-currency divergence." While the Nikkei 225 index has surged by 40% and reached historic highs this year, the yen has touched its lowest level since 1986. The disconnect between the Japanese stock market, Japanese government bond market, and yen exchange rate is evident - as foreign capital continues to flow in massively, driving Japanese stocks to new heights while Japanese bonds and the yen struggle. Companies such as Kioxia, SoftBank, Socionext, Advantest, Tokyo Electron, Lasertec, Disco, Murata, and Shin-Etsu, which collectively account for a high weightage in the Nikkei 225, in the AI semiconductor chip and semiconductor equipment categories, are the most important "narrative axes" for the recent large-scale inflows from foreign investors into the Japanese stock market, contributing to the surge in the Nikkei 225 index and reaching record high levels. Undoubtedly, the demand for AI computing infrastructure such as DRAM/NAND/HBM storage chips, 2.5D/3D advanced packaging, data center optical interconnects, data center CPUs, high-performance Ethernet infrastructure, and data center power infrastructure is real and continually expanding. However, from a macro and trader perspective, the accelerated depreciation of the Korean won and the Japanese yen indicates that the Asian AI export chain is facing pressure from US dollar liquidity and import inflation, while the massive expansion of leverage ETFs suggests that marginal buyers are increasingly relying on high leverage, intraday rebalancing, and trend following. The increasing leverage and position crowding in the AI semiconductor trading theme, along with rising pressures on leading consumer electronic companies like Apple to increase prices, have led to significant fluctuations in the Philadelphia Semiconductor Index, with multiple instances of sharp drops exceeding 5% within a month, highlighting the high volatility, leverage, extreme crowding of long positions, and pressure to meet high expectations in the AI computing power industry. This is why institutional investors have recently been emphasizing narratives such as "the AI semiconductor trading frenzy has peaked" and "the AI bubble is gradually bursting," which are overly pessimistic bear market narratives. The global AI super bull market is likely entering a phase where "fundamental demand for computing power remains strong, but financial structures are more crowded, currency exchange rates related to the AI computing power chain are more fragile, and volatility transmissions are faster." At this moment, the true determinants of success in the market may not only depend on chip profit upgrades, but also on whether the US dollar continues to strengthen, whether central banks in the Asian region intervene in exchange rates, and whether leveraged AI investment products trigger passive selling feedback loops. The simultaneous depreciation of the Korean won and the Japanese yen! The foreign exchange rate defenses in Asia face another test, with the Korean won nearing a 17-year low, South Korea and Japan communicating on the exchange market. "We have been closely working with Japan and other relevant countries, exchanging information very closely," said Huh Chang at a press conference when asked if Seoul might participate in any policies with Tokyo to stabilize the currency market. Huh Chang is one of the two deputy ministers of finance in South Korea, responsible for all matters related to foreign exchange. "The Korean won is currently in a position of divergence compared to economic fundamentals." Just days before the historic transition to 24-hour trading for the USD/KRW currency pair, Huh refused to provide further details on any potential South Korean government intervention measures in the foreign exchange market. However, he added that the government is prepared to deploy proactive measures to stabilize the USD/KRW market if local liquidity shortages lead to excessive price fluctuations. As Huh issued a warning regarding the Korean won, which hovers near a 17-year low against the US dollar, there were recent reports suggesting that officials from the Japanese Ministry of Finance are turning to non-targeted and increasingly aggressive strategies to squeeze institutional speculative forces that have been heavily shorting the yen. The yen is currently hovering near a 40-year low. The continuous depreciation of the Korean won has been an ongoing headache for Seoul; the Korean won has depreciated by 7.4% against the US dollar since the beginning of the year, demonstrating a sharp divergence from the local stock market, which has seen a frenzied increase of approximately 85% in the benchmark KOSPI index since the beginning of the year, with a peak increase of over 100% at one point. Moon Ji-sung, another deputy minister of finance in South Korea who also attended the press conference, stated that the government led by President Lee In-moo has been maintaining close communication channels with Tokyo and Washington on foreign exchange affairs. Moon added that with the extension of trading hours in the onshore trading session, the government expects foreign exchange trading volume in the offshore non-deliverable forwards (NDF) market to shift to the onshore spot market. "We are studying measures to encourage this significant shift," Moon said in a recent interview. With the simultaneous depreciation of the Korean won and the Japanese yen, combined with the uncontrolled expansion of leveraged ETFs in South Korea, the AI super bull market faces a significant stress test. The recent simultaneous violent depreciation of the Korean won and the Japanese yen, extreme stock-currency divergence between Korea and Japan, and the record level of crowded long positions and increasing leverage in the South Korean stock market all indicate that the grand narrative is transitioning the AI super bull market from a "fundamental-driven upward cycle" to a stage of significant pressure testing characterized by "extreme exchange rate volatility and fragility, record leverage fund structure, and over-crowded trading in single AI super dragon head stocks." The South Korean deputy minister of finance has clearly stated that the Korean won is in a "divergent" position relative to economic fundamentals and has indicated that they are in communication with key allies such as Japan and the United States regarding foreign exchange matters. With the Korean won depreciating by 7.4% against the US dollar this year, hovering near a 17-year low, and with a sharp contrast to the KOSPI's approximately 85% increase, it is evident that the Asian AI export chain, despite benefiting from capital expenditure redemptions in AI GPU/AI ASIC/TPU, HBM/DRAM/NAND, advanced packaging expansion, semiconductor raw materials and equipment, data center CPU, etc., is under unprecedented pressure from a strong dollar, expectations of the Federal Reserve raising interest rates, rising energy import costs, and capital inflows into US AI assets. When statistics show that the trading volume of the "double Hynix ETF" on days of extreme volatility can account for two-thirds of total transactions of SK Hynix stocks, and with a global leverage ETF size of $270 billion, the core implication is that the AI computing power trading theme has evolved from "buying profit upgrades" to "buying momentum, buying leverage, and buying rebalancing flow." Once prices reverse, mechanical unwinding can rapidly transmit stock retracements from single stocks to the KOSPI, the entire Asian AI semiconductor chain, the Nasdaq, and even global tech stocks. Even more dangerously, AI core assets like SK Hynix have transformed from mere "fundamental stocks" to amplifiers of global AI risk appetite through leverage ETFs, swaps, options, market maker hedging, and index weighting adjustments. The CSOP SK Hynix Daily 2x product aims to provide double the daily performance of SK Hynix, with official documents indicating the possibility of using up to 49% of net assets for options to gain leverage exposure, with estimated costs of swaps and options expected to be 15% to 40% of net assets annually. Earlier reports revealed that the product's asset size once exceeded $16.8 billion, making it one of the largest ETFs in Hong Kong, highlighting the extreme popularity of AI semiconductor leveraged bets in the market. For the global AI super bull market, the concern is not industry logic failure, but a warning of market structure fragility. Looking at the actual AI data center engineering and AI computing power industry aspect, components such as HBM and storage modules, AI server clusters, data center optical interconnect components, advanced packaging, cloud-based AI inference resources, and data center power requirements are still very real and continuously growing. However, from a macro trading standpoint, South Korea's imminent move to 24-hour USD/KRW trading may exacerbate liquidity gaps during vulnerable periods, leading to increased exchange rate volatility, while the rising trend of leveraged investments by retail investors in Korea and the frenzy of chip-related single-stock leveraged ETFs have repeatedly drawn regulatory and market attention. In the next phase of the AI super bull market, success will not only depend on whether companies like Nvidia, SK Hynix, and TSMC can continue to meet profit expectations, but also on whether the USD/KRW and USD/JPY will trigger large-scale policy interventions, whether leveraged ETF rebalancing will shift from being driven by favorable market conditions to being driven by adverse market conditions, and whether funds will transition from "AI fundamentals" trading to "AI leverage and record-crowded position bubble bursting" trading.