In financial markets, Ghost Month can be a period of caution, with large investments delayed and trading activity reduced. This time, optimism over technology stocks may offer a different story.
Stronger-than-expected second-quarter earnings, particularly of major artificial intelligence (AI)-related companies, supported US technology stocks’ recent performance. This helped improve investor confidence amid market volatility due to the Middle East tensions.
The AI story is increasingly viewed on companies’ ability to generate profit. Recent earnings of major hyperscalers like Alphabet, Microsoft, and Amazon have helped ease some concerns over massive AI investments taking too long to bear returns.
Worries over Chinese AI players—viewed as more economical and called into question the cost of AI development—have also eased. Investors have since refocused to companies with stronger earnings and clearer monetization paths.
Strong technology earnings have also strengthened the broader AI investment cycle. Robust infrastructure demand supports a range of tech companies across semiconductors, cloud computing, and data centers.
Meanwhile, mega-cap technology firms are an important pillar of the US equity market, as they account for roughly 35% of the S&P 500 index and over 50% of the NASDAQ Composite index.
The AI rally’s sustainability may depend more on whether earnings can justify the amount of ongoing AI investments than seasonal patterns. Nvidia’s earnings report on August 26 may offer another gauge of whether strong AI demand can sustain investment expectations.
Emerging markets ended on a turbulent note in July, as Taiwan and South Korea’s stock markets fell over 10% and 20% on a month-on-month basis, respectively.
This was due to global investors’ concern over AI capital spending’s sustainability and technology stocks’ uptrend, as well as reduced exposure to risk assets amid tensions in the Middle East.
Nevertheless, the recent US IT sector’s earnings reignited confidence in the AI supercycle. This optimism may allow stock markets in South Korea and Taiwan to bounce back, given that they are key parts of the global technology value chain.
Leverage heavily affected the sharper sell-off in South Korea’s stock market, though concerns are easing for now.
In early 2026, South Korean regulators allowed single-stock leveraged exchange-traded funds (ETFs). Retail investors heavily utilized these, taking on leverage to concentrate bets on technology stocks.
When South Korea’s KOSPI began to slip in July, these positions were force-liquidated, accelerating the decline. Now, as the assets under management of these leveraged ETFs have dropped close to their lows, South Korea’s stock market may be less vulnerable to cascading liquidations.
Furthermore, economic growth in South Korea and Taiwan is poised to remain structurally elevated and hold above their long-term trends, helped by the ongoing AI export cycle. Their stock markets’ record performance earlier this year continues to drive robust private spending.
Overall, while investors may keep a generally defensive stance, as caution around Ghost Month lingers, strong underlying fundamentals may provide a strategic opportunity to selectively add exposure to the technology sector.
SOPHIA THERESE “PIA” BONIFACIO is a Research Officer at Metrobank, covering local and offshore macroeconomic research. She obtained her Bachelor’s degree in Economics with a Specialization in Financial Economics, cum laude, from the Ateneo de Manila University and is a Certified UITF Sales Person (CUSP). Pia enjoys long road trips and loves a good cup of hojicha latte.
MARIA CHRISTINA “YNA” VIRTUDAZO is an Investment Counselor at Metrobank’s Institutional Investors Coverage Division. She is a licensed Fixed Income Market Salesperson of the Securities and Exchange Commission and a certified Unit Investment Trust Fund (UITF) salesperson. She graduated with a bachelor’s degree in business administration from the University of the Philippines – Diliman. She spends her free time listening to K-pop, writing fanfiction, and watching Netflix series and K-dramas.
