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Asian equities tumbled on Wednesday, extending a technology-led sell-off in US markets triggered by fears of an AI investment bubble.
South Korea’s Kospi, one of the year’s top performing indices due to enthusiasm over artificial intelligence, slid as much as 6.2 per cent. Japan’s Nikkei 225 index closed down 2.8 per cent.
The declines came after the S&P 500 and tech-heavy Nasdaq on Tuesday dropped 1.2 per cent and 2 per cent respectively, as concerns rose about the elevated valuations for AI companies and Wall Street executives warned markets were vulnerable to a retreat.
Hong Kong’s Hang Seng index edged down 0.2 per cent and mainland China’s benchmark CSI 300 rose 0.2 per cent, while in Taiwan the Taiex shed 1.3 per cent after dropping as much as 2.6 per cent.
US and European markets are poised for further declines on Wednesday. Futures for the Stoxx Europe 600 index and Nasdaq 100 fell 0.5 per cent and 0.3 per cent, respectively.
“There is some point where we will be probably closer to a correction than we are to a 10 per cent, 20 per cent [rise] up from here,” said Andrew Schlossberg, chief executive of Invesco, speaking during a financial summit organised by the Hong Kong Monetary Authority.
Asian stock markets have outperformed this year but their gains have been concentrated in shares of companies exposed to AI demand in the US. OpenAI, Anthropic and Elon Musk’s xAI have had their values marked up repeatedly over the past year.
“AI expectations have increased significantly in north Asia over the past month,” said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas, citing a string of deals between the region’s chipmakers and US AI businesses.
Asian chipmakers were among the companies most heavily sold. SK Hynix and Samsung Electronics, manufacturers of the high bandwidth memory chips used in AI, fell as much as 9.1 per cent and 7.2 per cent, respectively before paring losses.
Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, slipped 2.7 per cent.
Yields on 10-year US Treasuries fell 0.02 percentage points to 4.07 per cent and the dollar weakened 0.1 per cent against a basket of its peers. Bond yields move inversely to prices.
Major Asian currencies and government debt were steady. The dollar weakened 0.1 per cent against the yen to trade around ¥153.5 while yields on 10-year Japanese government bonds were flat at 1.66 per cent.
Bitcoin reversed losses as it gained 1.5 per cent to $101,785 a token. Gold edged up 0.9 per cent to $3,966 a troy ounce after selling off on Tuesday.
