Asia Stocks Tumble as AI Rout Spreads From US
The Asia stocks tumble deepened on Friday as the sell-off in artificial intelligence stocks spread from Wall Street, with Japan’s Nikkei index down 7 per cent and share prices in South Korea and Taiwan down more than 8 per cent.
The rout deepened as investors worried about tougher regulation and a slowdown in AI spending. The fall in US stocks was the steepest since the tariff-driven “Liberation Day” sell-off in April 2025.
Japan’s Nikkei slumped 7 per cent as soon as the market opened, while benchmark indices in South Korea and Taiwan dropped more than 8 per cent. Stocks then steadied as bargain hunters stepped in.
Asia stocks tumble: the numbers behind the fall
Wall Street’s volatility “fear gauge” soared as the Nasdaq sank 5.5 per cent and $3 trillion was wiped off S&P 500 firms. Investors feared the Democrats, who dominated this week’s US midterm elections, would slow the AI boom with new rules.
The political worries hit an AI trade that was already shaky. Investors have grown doubtful about the returns companies will earn on the enormous sums they have poured into AI 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.
The damage was heaviest among chipmakers. Samsung fell nearly 10 per cent and SK Hynix 12 per cent in South Korea. Kioxia plunged 14 per cent in Japan, while TSMC fell as much as 8.5 per cent in Taiwan. SoftBank slid 11 per cent.
“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.
Confidence cracks as data centres draw fire
Investors also feared that a slowdown in AI infrastructure spending could hurt smaller firms, whose ability to raise funds has already been limited by higher interest rates.
“It’s pretty clear there’s been a real shift in sentiment,” said Michael McCarthy of brokerage Moomoo. Investors are also pricing in growing local opposition to data centres.
The Philadelphia Semiconductor Index slumped 12.2 per cent overnight, and the Nasdaq has now shed 12 per cent from its record close a month ago. Feature Pakistan reported on the Wall Street slide earlier this week.
Some analysts said the sell-off had gone too far. Allen Huang of Mega Financial Holding said the market was likely in the final stage of capitulation, as even TSMC hit its daily limit down circuit breaker.
Investors seek refuge in bonds and yen
Bonds gained in Asia, with US Treasuries and government bonds in Japan and China rising, while the dollar slipped against the yen and Swiss franc. “Treasuries can probably rally a lot further,” said Nick Ferres of Vantage Point Asset Management.
What it means for Pakistan
Pakistan’s market, by contrast, has been on a record run. The Pakistan Stock Exchange extended its rally this week, with the KSE-100 gaining 3,450 points to reclaim the 175,000 mark. The rupee has also steadied, closing at Rs276.67 against the dollar.
Local shares are driven more by interest rates, the rupee and domestic earnings than by the AI trade. Even so, a long global sell-off would still reach Pakistan through foreign flows and commodity prices. Pakistan’s external debt has nearly doubled in a decade to $135 billion, according to the World Bank.
For now, Asian markets have steadied from their morning lows. Whether that calm holds will depend on what US policymakers say next about AI spending.
Dawn reported the market rout on Friday.
Frequently asked questions
How far did Asian markets fall on Friday?
Japan’s Nikkei slumped 7 per cent, while benchmarks in South Korea and Taiwan dropped over 8 per cent. Samsung fell nearly 10 per cent, SK Hynix 12 per cent and TSMC as much as 8.5 per cent.
Why did AI stocks fall?
Investors worried Democrats would apply tougher rules to the AI boom after dominating the US midterms, and that firms would earn poor returns on their AI spending.
How much value was wiped off US stocks?
The Nasdaq sank 5.5 per cent, $3 trillion was wiped off S&P 500 firms, and the Philadelphia Semiconductor Index fell 12.2 per cent.
Where did investors put their money instead?
Bonds gained across Asia, with US Treasuries and government bonds in Japan and China rising, while the dollar slipped against the yen and Swiss franc.
How did Pakistan’s market perform?
The KSE-100 gained 3,450 points to reclaim the 175,000 mark, and the rupee closed at Rs276.67 against the dollar.
