A rout in Asia’s tech-heavy markets deepened on Friday as fear of increased regulatory scrutiny and a slowdown in AI build-out precipitated the steepest decline in US stocks since the tariff-triggered “Liberation Day” selloff in April 2025.
asserted
fear → deepen → April
Japan’s Nikkei slumped 7 per cent immediately after the opening bell while benchmark share price indices in South Korea and Taiwan dropped more than 8pc.
asserted
indices → slump → Korea
Stocks across the region then appeared to stabilise as dip buyers emerged.
asserted
buyers → appear → region
European stock futures also cut initial loss and were last down 0.6pc.
asserted
futures → cut → loss
Nasdaq futures were up 1.4pc though sentiment remained fragile.
asserted
sentiment → remain → ?
Wall Street’s volatility “fear gauge” soared, the Nasdaq sank 5.5pc and $3 trillion was wiped off S&P 500 firms, with investors worried Democrats, who dominated midterm elections this week, will apply brakes to the AI boom.
asserted
who → soar → boom
The political jitters are hitting an AI trade already on shaky footing due to worry about return on companies’ enormous investment in artificial intelligence-related infrastructure.
“There is also clearly an element of panic in the selling, and positioning is making the adjustment much more violent,” said Charu Chanana, chief investment strategist at Saxo.
asserted
Chanana → hit → Saxo
“When investors begin unwinding these positions simultaneously, the selling can become self-reinforcing, particularly if leverage and forced liquidations are involved.”
asserted
leverage → begin → positions
The meltdown spooked retail investors and hedge funds alike, while policymakers and regulators scrambled to stem the selling.
asserted
policymakers → spook → selling
AI chipmakers Samsung Electronics and SK Hynix fell nearly 10pc and 12pc respectively in South Korea.
asserted
Electronics → fall → Korea
Kioxia plunged 14pc in Japan while TSMC fell as much 8.5pc in Taiwan.
asserted
TSMC → plunge → Taiwan
AI investor SoftBank Group slid 11pc, while the cost of insuring against the Japanese firm defaulting on debt jumped to its highest in four years.
“The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone,” said Dong Baozhen, chairman of asset manager Lingtong Shengtai.
asserted
Baozhen → slide → Shengtai
Now that backbone has snapped.
asserted
backbone → snap → ?
Can AI bull markets elsewhere hold up on their own?”
asserted
markets → hold → own
Sentiment shifts, cracks emerge
Investor fear also centred on whether a stalling AI infrastructure expansion could hurt smaller firms whose capacity to raise funds has already been limited by higher interest rates and tighter financial conditions.
uncertain
capacity → shift → rates
Neocloud firm CoreWeave, which has become a barometer of investor anxiety over heavy AI spending and borrowing, slumped 10pc, while its five-year credit default swap spreads widened to a record level.
“It’s pretty clear there’s been a real shift in sentiment,” said Michael McCarthy, chief executive for Australia and New Zealand at brokerage Moomoo.
asserted
McCarthy → become → Moomoo
The selling indicates investors are starting to factor in increased local opposition to data centres, with analysts saying markets have yet to fully consider the cost such building has imposed on communities.
asserted
building → indicate → communities
The Philadelphia Semiconductor Index slumped 12.2pc overnight and the Nasdaq, which reversed an initial swing higher after the midterms before dropping, has now shed 12pc from its record close a month ago.
asserted
which → slump → close
Still, some analysts said the selloff was overdone and the bottom was not far off.
asserted
bottom → say → ?
“Today we are bound to see further liquidation of margin accounts, which suggests we are likely in the final stage of capitulation,” said Allen Huang, a vice president of Mega Financial Holding’s equities trading department.
uncertain
Huang → bind → department
“Even TSMC hit its daily limit down circuit breaker at one point, which typically marks the tail end of a downturn.
asserted
which → hit → downturn
When TSMC gets sold off, that means all stocks have been thoroughly dumped,” Huang said.
asserted
Huang → sell → ?
Finding refuge in bonds and Yen
Bonds gained in Asia, with US Treasuries as well as government bonds in Japan and China rising, while the US dollar slipped against haven currencies such as the yen and Swiss franc.
“Treasuries can probably rally a lot further,” said Nick Ferres, chief investment officer at Vantage Point Asset Management.
asserted
Ferres → find → Management
The yield on the benchmark US 10-year Treasury note was at 4.838pc, hovering near the lowest level since September 9.
asserted
yield → hover → September
The 10-year JGB yield dropped as much as 9 bps to 1.795pc, the lowest since June 30.
asserted
yield → drop → June
The Aporia
