"The biggest sale since the coronavirus": The month that shook global stock markets
July in global stock markets was characterized by sharp declines led by technology stocks, particularly the chip sector, which plummeted by a double-digit rate. Concerns over an AI bubble were compounded by Middle East escalation and rising oil prices.
July is usually considered a strong month in global capital markets, but this year — unless there is a significant change on the last trading day — it will end in the red.
On Wall Street, the Nasdaq index, identified with technology stocks, led the negative trend, and yesterday's sharp gains were not significant enough to change the monthly trend. Reports from technology giants did not dispel concerns regarding the return on investment in artificial intelligence, which requires heavy capital expenditure. Simultaneously, chip stocks, the big hit of recent months, changed direction. Investopedia noted data from Vanda Research, according to which this week "retail investors recorded the largest net sale of individual stocks since the coronavirus," due to concerns about Middle East tensions and an AI bubble.
Chip stocks
After doubling in the first half of the year, the Philadelphia Semiconductor Index erased the gains of the last three months and fell by a double-digit rate this month. Experts attribute the declines to a combination of fear of Chinese competition, a slowdown in AI infrastructure investments, geopolitical tensions, and profit-taking.
Within the chip sector, memory stocks stood out negatively. The Korean SK Hynix, which went public on Nasdaq this month, has lost about 11% since its IPO, despite reporting record results. Sandisk stock has lost over 35% of its value since its late June peak, erasing 195 billion dollars in market value after surging 884% year-to-date.
The decline in chips caused the Korean KOSPI index, heavily skewed towards memory chips due to the weight of SK Hynix and Samsung Electronics, to plummet by more than 21% this month.
Notable stocks
Sandisk, the strongest stock in the S&P 500 last year, fell by more than 55% this month, though it remains the strongest performer year-to-date. Micron also suffered, falling 24%. These factors have led the market to question the valuation of chip stocks.
Conversely, Apple stock showed the best performance among the "Magnificent Seven" ahead of quarterly reports, surging 23%, but fell 4% in after-hours trading following the report. Earlier this week, the company's market value briefly crossed 5 trillion dollars. Software company Intuit jumped about 21%, despite firing 17% of its employees (about 3,000 people) last month.
Among TA-125 stocks, energy companies Bazan and Tamar Petroleum rose 26.1% and 24.5% respectively. Dual-listed Nice jumped 20.8%. Conversely, Nova and Tower fell 19.3% and 19.3% respectively, while Electra Real Estate and Mega Or weakened by 22.3% and 19.8%.
The cooling IPO wave
On the local stock exchange, July brought a series of IPO cancellations. A record number of companies filed prospectuses, but deteriorating market conditions cooled demand. Metalicon froze its IPO plans to raise 150 million shekels at a 550 million shekel valuation, as institutional investors demanded a valuation of around 350 million shekels. Previously, Orda Print and Aviv Real Estate cancelled their IPOs. In contrast, Avisror compromised, lowering its valuation from 2.6 billion to 2.2 billion shekels.
Comeback of the dollar
After the shekel strengthened against the dollar in the first five months of the year, falling from 3.19 to 2.81 shekels, a reversal occurred. Since early June, the dollar has strengthened significantly to around 3.087 shekels. Alex Zabezhinsky, chief economist at Meitav, noted that the shekel remains one of the world's weakest currencies, having lost its usual correlation with the US stock market due to increased foreign currency exposure among investors.
Israeli company reports
Among Israeli companies reporting, Teva stood out, with shares jumping nearly 10% in New York after raising its annual revenue forecast. Conversely, Fiverr, Lemonade, and Radware plummeted 20.5%, 23.7%, and 17.2% respectively due to disappointing forecasts or AI-related concerns. Mobileye fell 14.9% following the announcement of founder Prof. Amnon Shashua's retirement as CEO, while Check Point shares fell sharply after missing analyst revenue forecasts.
