• Analysis
Tech Stocks Plunge: Seoul and Tokyo Lead Asia Sell-Off After Nasdaq's Worst Day Since April
Asian tech stocks plunged on Friday, with Seoul losing almost nine percent and Tokyo seven percent, tracking a Wall Street rout in which the Nasdaq dropped 5.5 percent on fears Democrats will tighten AI regulation after their US midterm results.
Wall Street sets the tone
The plunge in Asian tech stocks began with a brutal session in New York, where the Nasdaq plunged 5.5 percent - its worst day percentage-wise since April last year, when Trump unveiled his global tariffs. The S&P 500 fell more than four percent and the Dow more than three percent.
- •Bloomberg reported the Philadelphia Semiconductor Index collapsed around 16 percent this week
- •That put it on course for its worst run since April last year
Neil Wilson of Saxo Markets summed up the mood: "The blood is in the streets, folks". He said the fear was a total momentum unwind as Democrats moved against the data centre buildout, calling the sell-off "totally overdone".
Where the losses landed
Seoul led the kospi sell-off, plunging almost nine percent at one point, with chip giant SK hynix off 10 percent while rival Samsung was eight percent down.
- •Tokyo dived seven percent, with Kioxia and SoftBank giving back more than 10 percent and Advantest more than eight percent lower
- •TSMC's seven-percent drop dragged Taipei's Taiex around eight percent lower
- •Hong Kong, Shanghai, Sydney and Singapore were all down more than one percent, with Wellington and Manila also in the red
The Kospi itself has had a dramatic year: it more than doubled between the end of December and mid-June, when it hit a record, and has since lost almost 50 percent.
Why investors ran for the exit
Asian tech firms suffered what analysts described as a bloodbath on Friday as investors tracked the Wall Street collapse, fuelled by fears that Democrats will ramp up regulations on the AI sector after their strong US midterm results. Data centres have faced broad opposition from US voters across the political spectrum, and many midterm winners pledged to put the brakes on their construction.
Analysts said investors were also spooked by progressive US Senator Bernie Sanders' call for a national moratorium on building data centres. Michael Hewson of MCH Market Insights noted the results in Texas raised concerns that politicians in the state might target Elon Musk's Tesla and SpaceX over the tech billionaire's support for Trump.
The sell-off also compounded existing worries about the hundreds of billions of dollars firms had pumped into AI and when they would see a return, with rising borrowing costs and stretched valuations adding to the pressure.
Trump's response and what is next
Trump blamed the crash on Democrats, writing on Truth Social: "The Stock Market crashed today because the Dumocrats had a big Tuesday - So sad to see, you only have yourselves to blame!"
Notably, the initial Democratic "blue wave" in Tuesday's vote had been welcomed on hopes it could pressure President Donald Trump to wind down his campaign against Iran - before the AI buildout fears came to the fore. Oil prices rose further, extending Thursday's gains after plunging on the midterm results amid hopes for an end to the Iran war, with US and Iranian leaders having indicated progress earlier in the week. US jobs data was due later on Friday, following broadly positive readings earlier in the week.
