Asian stocks including KOSPI slide as AI doubts hit chipmakers
- Asian stocks fall as double-digit drops in SK Hynix and Samsung heavily dragged down South Korea's benchmark index, KOSPI.
- The Nikkei 225 hit a two-month low while mainland Chinese equities also ended lower.
- Strong capital inflows and robust IPO activity helped the Hang Seng Index post modest gains.
Asian stocks fall sharply on Tuesday as mounting skepticism over the massive financial returns on artificial intelligence spending triggered a widespread sell-off across global semiconductor shares. The tech-driven downturn rippled from Wall Street into Asian markets, while investors shifted toward safety, driving bond prices higher and sending oil lower.
South Korea’s market bore the brunt of the hit, with the benchmark KOSPI plunging 9.45% to trade near 6,120. Major chipmakers SK Hynix Inc. slumped up to 13%, and Samsung Electronics Co. dropped as much as 10%, dragging down the broader MSCI Asia Pacific equity gauge by more than 3%. The steep drop in KOSPI 200 futures forced the Korea Exchange to activate a five-minute "sidecar" trading curb to temporarily suspend program sell orders, marking the index’s 22nd such halt this year.
Elsewhere in the region, Japan’s Nikkei 225 dropped 4.38% to a two-month low around 62,090, while the broader Topix index lost 2.3% to stand at 3,973. Key tech and finance names, including Kioxia Holdings, SoftBank Group, Advantest, and major banking stocks, all posted significant losses. China’s SSE Composite also closed lower, falling 0.83% to around 3,830.
Bucking the regional slump, Hong Kong’s Hang Seng Index rose 0.58% to around 25,350. Robust capital inflows, strong IPO momentum, and sustained investor enthusiasm for local tech and AI shares allowed Hong Kong to offset the global semiconductor sell-off and extend its recent market rally.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
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