Portfolio update July 2026

Hi! Welcome to a subscriber-only edition of Asian Century Stocks – a newsletter about Asian value stocks. For a complete list of all previous posts, check out the Table of Contents.

Market commentary

Wow, it's been quite a month. We've had a full-on panic when it comes to Korean semiconductor stocks, causing the overall index to decline:

That's what happens at every peak: these value-weighted indices become overly concentrated in individual sectors. And this time around: Korean and Taiwanese semiconductor stocks.

It does feel like "the continuity of thought towards higher prices" has been broken, to use a Bernard Baruch term. I question whether Korean retail investors can regain their optimism, even if the squeeze in DRAM prices continues.

According to Twitter user fintechgirl, 360,000 accounts have been liquidated in Korea. Sadly, the government has been forced to open a debt-counseling hotline to prevent suicides.

Here's the round-up of year-to-date returns for the major Asian indices:

The tech-heavy KOSPI has gone from +99% up year-to-date to just +34%. Over the same time period, the TWSE has gone from +68% to just +43%.

We still don't know what caused the crash. Taiwanese research firm Trendforce reports that spot memory prices have been more or less flat over the past few weeks. Some are hypothesizing that it was the SK Hynix and CXMT IPOs that sucked liquidity out of the market. Others believe it was the Korean rate hike on 16 July 2026, which, by the way, helped the Korean Won rise +7% against the US Dollar.

Baskets of "anti-AI stocks" have done surprisingly well. These include:

• Buyers of memory chips: smartphone makers Xiaomi and Transsion, console makers Nintendo and Sony, as well as Taiwanese PC makers like Getac and MSI
• Japanese software developers: OBIC Business Consultants, Sansan, Money Forward and Freee

Here's a chart of how these stocks have performed over the past month:

Is there any logic to this? I don't really think so. Just because memory chip prices are declining doesn't mean SaaS isn't at risk from Claude.

It's more likely that we've simply seen wholesale de-grossing of funds previously long tech hardware and short software.

The AI-trade seems to have affected almost all markets in Asia. The Philippine PSEi rose almost +5%, perhaps because it's been seen as a loser in the AI revolution. Hong Kong equities also outperformed, with Tencent and Alibaba rising by double digits. They've been out of favor for more than half a year.

I spoke at Swen Lorenz's excellent Weird Shit Investing Online conference. Most of us were focused on value, and I noticed that much of the discussion revolved around small caps in Korea, Hong Kong, and the Philippines. That's probably not a coincidence – these are some of the lowest-P/E markets in Asia right now:

Not to say that the MSCI Korea is necessarily undervalued at 4.8x P/E. Because estimates for chipmaker profits well over US$500 billion are hard to fathom, even if hyperscaler capex ramps up further.

Portfolio update

The portfolio rebounded strongly in July, up +3.8% month-on-month. Since the portfolio's inception in October 2021, the portfolio's value has increased by +81.5%, equivalent to a +13.1% compound annual growth rate:

The biggest contributors were the two software developers Freee (accounting) and Visional (job board). There was no real company-specific news that could have explained these share price moves.

Here's what my Asia-focused portfolio looked like as of 29 July 2026: