Asia Pacific Monthly Wrap: July 2026: De-leveraging in AI stocks drives sector/market/factor rotation

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Asia Pacific Monthly Wrap: July 2026: De-leveraging in AI stocks drives sector/market/factor rotation

J P M O R G A N Global Markets Strategy

03 August 2026

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Asia Pacific Monthly Wrap

July 2026: De-leveraging in AI stocks drives sector/

market/factor rotation

• MSCI Asia Pacific and MXASJ fell only 1.3% and 3.2% over the month, Equity Macro Research

AC respectively, but this hides substantial intra-month and sector/market/factor Rajiv Batra

variation driven by a pullback in AI stocks. Not for the first time, concerns had (65) 6882-8151

surfaced in late June about the sustainability of AI capex due to hyperscalers’ rajiv.j.batra@jpmorgan.com

financing and monetization challenges and competition from China. But the J.P. Morgan Securities Singapore Private Limited

resultant wobble in AI stocks was amplified by an intense positioning unwind Mixo Das AC

(including from equity hedge funds and leveraged ETFs in Korea) in July. This (852) 2800-0511

mixo.das@jpmorgan.com

de-leveraging of positions triggered rotations in all aspects: from North Asia J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

to ASEAN/India, from Tech/Industrials to Discretionary/Financials, from Morgan Broking (Hong Kong) Limited

Momentum/Growth to Low Vol/Value. Towards the end of the month, it Joy Wang AC

appeared that the de-leveraging in Korea had run its course, resulting in a sharp (852) 2800-2322

rally on the last day (AxJ Tech recovering almost half its July losses). This was joy.y.wang@jpmorgan.com