Two of your holdings could have fallen hard this week for opposite reasons. One dropped because a cheaper rival might kill demand for it. The other dropped because it couldn't get enough of the exact same thing fast enough.
The Big Story: The Same Boom Broke the Market Twice
If you hold a semiconductor ETF, tech RSUs, or a broad “tech” fund, you watched it fall hard on Friday. If you also hold IBM, you watched something worse three days earlier. Both trace back to the same underlying force.
On Thursday, Chinese lab Moonshot AI released a new model, Kimi K3, matching top US models on independent tests at a fraction of the price. The market’s read: if China can build this cheaply, the giant chip orders funding the AI trade may be oversized. Chip stocks sold off hard Friday. The sector-wide index (the Philadelphia Semiconductor Index) fell around 10% for the week, now more than 20% below its June peak and officially in a bear market. Nvidia alone lost close to $200 billion in value over the week.
Three days earlier, IBM had already crashed, and worse: roughly a quarter of its value gone in a single session, its worst trading day on record, close to $68 billion wiped. The cause ran the other way: a genuine shortage of memory chips is pushing prices up so fast that IBM’s own customers diverted budget toward hardware, at the expense of the software IBM sells.
One stock fell on fear that chip demand is overbuilt. The other fell because that same demand is outrunning supply. For a European or Gulf-based executive holding exposure to both, that’s the story this week actually told.
What Else Is Moving
Iran’s war intensifies, Hormuz shut again. CENTCOM carried out its sixth straight night of strikes on Iran this week, and Tehran says the blockade on the Strait of Hormuz, the route for roughly a fifth of the world’s oil, is back in force after Iranian attacks on commercial vessels. Iran’s health ministry reports over 50 killed and 500 injured since the strikes began. The International Energy Agency calls it the largest oil-supply disruption on record. Brent crude rose to around $88 a barrel, up 14% on the week.
The Fed’s rate case cooled. The Bank of England hasn’t moved. US inflation for June came in at 3.5%, cooler than expected, easing pressure on the Fed ahead of its month-end meeting, though a September hike remains live. Britain’s Bank of England held its rate at 3.75% for a second straight meeting, with markets now pricing a hike later this year. UK ten-year borrowing costs sit near 5%, a two-month high.
Gold fell again, despite a live war. Gold slid again this week, settling near $4,000 an ounce even as the Iran conflict intensified. Rising oil is being read as inflationary, keeping the case for higher rates alive, which is outweighing the usual pull toward gold as a safe haven.
Britain gets a new prime minister. Andy Burnham became the UK’s seventh prime minister in a decade on Monday, naming the cost of living his first priority. Gilts and sterling held steady through the transition.
The Expat Takeaway
Nothing about this week agreed with itself. Today’s useful move is a check on something older: whether your equity exposure expresses more than one view on where this goes. A semiconductor ETF, chip-adjacent RSUs, and a “tech” fund that’s 40% the same five names are one trade wearing three labels. Add up every fund, every RSU grant, every pension sleeve: is AI compute one line item, or most of the portfolio?
If it’s one line item among several, this week is one to watch, not touch. If it isn’t, the work was already overdue, and a week where the market can’t decide which way the story cuts is the moment to fix it, before conviction returns.
Until next week.
Cip | Bratu Capital
Managing wealth for globally mobile professionals across Southeast Asia.