Iran conflict may further widen the gap between Asian tech stocks and consumer stocks

Glonhui March 25｜The Iran conflict may help Asian tech stocks further outperform consumer stocks, as concerns increase that the inflationary effects of war will outweigh its damage to the artificial intelligence supply chain. This year, the Asian technology stock index has risen by more than 19%, while the consumer discretionary index has fallen by nearly 7%. Since the outbreak of the war, both indexes have dropped by over 9%. Fund managers expect that although geopolitical tensions will suppress household spending, they will not hinder the global development of artificial intelligence, so the gap will widen further. David Chao, Global Market Strategist at Invesco Asset Management, said: "We are seeing foreign capital flow more intensively into AI-related fields compared to the Asian consumer sector." He added that this trend could intensify over the next year. Cyclical stocks may attract a higher risk premium, suggesting a divergence between AI-related stocks and those "more biased toward the real economy sector."