Chip stocks in Asia recovered Tuesday after their U.S. counterparts bounced Monday. The S&P 500 climbed 0.3%. The Nasdaq gained 0.86%. Tech stocks led both. Asian traders watched this happen, waited twelve hours, then did the exact same thing.
Imagine running a multi-billion dollar fund in Singapore or Tokyo. You have Bloomberg terminals. Research teams. Proprietary algorithms. Then you spend your entire Tuesday morning staring at what happened in New York the night before like you're checking your ex's Instagram.
The geographic arbitrage here is breathtaking. American chip stocks go up because—and I'm speculating wildly—someone somewhere decided semiconductors might be useful for computers. Asian markets, home to the companies that actually manufacture most of the world's chips, require confirmation from a different time zone before agreeing with this assessment.
TSMC makes the chips. Samsung makes the chips. They're in Asia. They know if demand is strong. They know if orders are coming in. But apparently none of that matters until some guy in Connecticut buys shares of a company that designs chips but doesn't make them, which then gives a guy in Taipei permission to buy shares of the company that actually fabricates the f*cking things.
This is called price discovery. Discovering prices that already existed yesterday. In a different country. Revolutionary stuff.
Retail traders in Asia woke up Tuesday, saw the Nasdaq was green, and immediately bought chip stocks without a single independent thought rattling around in their skulls. They could've asked literally anyone at the actual semiconductor factories what business looked like. Instead they consulted the American markets like they were checking a Magic 8-Ball.
The global financial system runs on a twelve-hour delay and the proud tradition of letting someone else think first.
Photo by Martin Sanchez on Unsplash
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