Asian Equities Tumble as AI Selloff Deepens — Update

By Sherry Qin and Fabiana Negrin Ochoa

Asian equities slumped Friday as the rout in stocks tied to the artificial-intelligence boom continued, sending tech-heavy indexes hurtling toward bear-market territory.

South Korea's Kospi, Japan's Nikkei and Taiwan's Taiex took the biggest hits, as heavyweight chip and tech stocks tracked the selloff on Wall Street overnight.

The Democrats' sweeping victory in the U.S. midterms sparked the latest downturn, as investors worried that more regulation will curb the AI infrastructure build-out, slowing demand for the hardware Asia specializes in producing.

Asia is particularly vulnerable to an AI-led market correction, said Charu Chanana, Saxo Markets's chief investment strategist. The downturn is partly a reassessment of future U.S. infrastructure demand, but also reflects how heavily investors have positioned in the same beneficiaries of the AI boom, she said.

The Kospi fell as much as 8.8%, triggering a 20-minute trading halt. It finished 6.0% lower on the day, bringing weekly losses to 12%.

In Tokyo, the Nikkei fell below the psychological 60000 level to close the session 6.0% lower in its worst day since April 2025.

Taiwan's Taiex managed to recoup some ground later in the session, but still ended 4.5% lower in its biggest daily percentage loss since July.

The usual suspects bore the brunt of the selling: Chip titan SK Hynix fell over 10% in Korea, while Japan tech conglomerate SoftBank Group shed more than 10% and TSMC fell 4.7% in Taipei.

Tech stocks in China and Hong Kong fared relatively better but were also in the red. The Hang Seng Tech Index was 1.8% lower, with AI labs MiniMax and Z.AI off by 9% and 10%, respectively. Chinese chip giants SMIC and CXMT were each down about 4.5%.

Even safe-havens like Singapore weren't spared. The FTSE Straits Times Index was last 2.9% lower, on track for its largest one-day percentage fall since October.

Precious metals got swept up as well, as investors liquidated positions to cover losses elsewhere. Gold fell 1%, pausing a brief rally, as oil prices resumed their climb upward, adding to the downbeat mood.

"The reality of the situation hit home," ANZ Research analysts said, noting that Iran still maintains control of the Strait of Hormuz and is unlikely to relinquish that control.

Initial hopes that a Democrat-controlled Congress could hasten progress toward ending the U.S.-Iran war evaporated as traders reassessed the likelihood of a speedy resolution.

"The reality of the situation hit home," ANZ Research analysts said, adding that Iran still maintains control of the Strait of Hormuz and is unlikely to relinquish that control.

Front-month West Texas Intermediate futures rose 1.3% to $91.68 a barrel and Brent futures gained 1.7%, reclaiming the $100-a-barrel mark.

Investors sought refuge in bonds. The Australian government 10-year bond yield slipped below 5.0%, while yields on Japanese government debt also declined. Bond yields move inversely to prices.

Some analysts say worries that Democrats will stall the data-center build-out meaningfully is overdone. If anything, a more measured pace of spending could be a tonic to concerns about stretched valuations and underwhelming returns that preceded the midterms.

David Bassanese, chief economist at Betashare, said he remained upbeat about the AI story. While there may be some extra conditions placed on the data-center rollout in some U.S. states, the investment outlook still appears strong, he said.

"The rapidly rising demand for AI services is also not going away anytime soon," he added.

--Tracy Qu and James Glynn contributed to this report

Write to Sherry Qin at sherry.qin@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

November 06, 2026 02:15 ET (07:15 GMT)