Morgan Stanley's Bearish Chip Report Sparks Debate, Underwriting Misses Raise Concerns

ME AI News: South Korea’s stock market plunged today, with SK Hynix dropping over 8% and Samsung Electronics falling more than 7%. Some analysts believe the decline is linked to a bearish report on memory chips recently released by Shawn Kim, Head of Asia-Pacific Technology Research at Morgan Stanley. However, others argue that the report may not be the direct cause of the market’s drop. In his report published on July 21, Shawn Kim stated that the AI-driven memory chip boom is nearing a turning point, with contract prices for memory likely to peak in the fourth quarter. The proportion of upward revisions to earnings forecasts has fallen from 92% to 77%. The report also noted that NAND module inventories have risen to approximately 13 weeks, nearing the pandemic-era peak of about 15 weeks, and proposed a trading logic: “Sell DRAM when NAND declines.” Meanwhile, Morgan Stanley failed to secure a role as co-lead underwriter in SK Hynix’s approximately $26.5 billion U.S. depositary receipts listing. Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase were selected instead, making Morgan Stanley the only top-tier investment bank left out. Estimating a 0.5% underwriting fee, the total commission for this deal is around $130 million. Several investment banking insiders said Morgan Stanley’s Seoul office has begun reflecting internally on whether its consistent issuance of negative semiconductor reports has harmed its investment banking business. Beyond the SK Hynix deal, Morgan Stanley has recently been involved in controversies surrounding SpaceX’s placement and the sale of IGIS Asset Management in Korea. These events further highlight the tension between the independence of its research division and the commercial interests of its investment banking operations, increasing reputational and business pressures on the firm in the Korean market. (Source: BlockBeats)