The sell-off that tore through America's technology stocks on Thursday reached Asia on Friday, and it hit hardest where the artificial-intelligence boom had made markets richest.
South Korea's Kospi closed 6.02 per cent lower after a fall of more than 8 per cent briefly halted trading. Japan's Nikkei 225 fell by about 6 per cent, leaving it 9 per cent down on the week and about 20 per cent below its June peak, the conventional threshold of a bear market. Taiwan's Taiex closed 4.51 per cent lower at 39,701.64, after falling almost 9 per cent at one point during the session.
The chipmakers took the blow
The heaviest losses fell on the companies that supply the machines behind AI. SK Hynix, the South Korean memory-chip maker, fell 10.44 per cent and Samsung Electronics 6.35 per cent. SoftBank Group, one of the most heavily committed investors in AI, lost 10.83 per cent. TSMC, which manufactures most of the world's advanced chips, fell 4.69 per cent, and Japan's Advantest and Kioxia fell 4.99 per cent and 8.72 per cent.
The Kospi is now about 44 per cent below its June high.
What set it off
Asia was reacting to Thursday's rout on Wall Street, when the Nasdaq Composite fell 5.52 per cent and the Philadelphia Semiconductor Index lost 12.2 per cent. Nvidia fell 9.3 per cent and AMD 17.3 per cent.
Investors are weighing what Tuesday's Democratic sweep of Congress means for the industry. Democrats have promised closer scrutiny of data centres, whose demand for electricity and water has become a local political issue. On the same ballot, voters backed restrictions on data centres in 40 of 41 local contests, according to a tally by the economist Ed Lane.
Behind the political trigger sits an older worry: whether the hundreds of billions of dollars being spent on AI data centres will earn an adequate return.
Timothy Moe, Asia-Pacific equity strategist at Goldman Sachs, pointed to forced selling as positions were unwound and stop-loss orders triggered. "The market's tendency is always to shoot first and ask questions later," he said.
Not everyone is selling
The damage was concentrated. Markets with less exposure to technology, in Europe, Australia and India, have held up better this month, and India's Nifty rose about 2 per cent on Friday. Mohit Kumar of Jefferies said he did not see the start of an unwinding of the AI trade.
Wall Street steadied later on Friday. The Nasdaq rose 1.09 per cent after a stronger-than-expected jobs report, though the same figures raised bets that the Federal Reserve will raise interest rates in December, which would make expensive technology shares harder to justify.
