AI Rout Hits Asia: Kospi Halted, Taiwan Posts Worst Week Since 1991
3 min readAsia’s AI trade took its hardest hit of the year on Friday. South Korea’s Kospi fell more than 8 percent and dipped below 5,000 for the first time since February, triggering a 20 minute trading halt, while Taiwan’s Taiex closed down 4.51 percent to cap a 12.19 percent weekly loss, its worst since 1991 according to LSEG data cited by Reuters. The Asia AI stock rout followed a 5.5 percent plunge in the Nasdaq on Thursday.
Background: a trigger in Washington
The selling started in New York after Democrats won control of Congress in the November 3 midterms. Investors read the result, along with a wave of local ballot measures restricting data centers, as a sign that the US AI build-out could slow under tighter oversight. The Philadelphia Semiconductor Index dropped 12.2 percent on Thursday and about $3 trillion was wiped from S&P 500 companies, Reuters reported.
What happened in the Asia AI stock rout
Asia, which supplies the chips and memory behind the boom, felt the shock first. In Taipei, TSMC opened limit down at NT$2,020 before closing 4.69 percent lower at NT$2,135, and MediaTek also opened at its daily limit, according to Storm Media. More than 1,600 Taipei-listed stocks touched their 10 percent limit at one point, and President Lai Ching-te asked the public not to panic.
In Seoul, SK hynix fell as much as 12 percent and Samsung Electronics nearly 10 percent. In Tokyo, the Nikkei 225 dropped 7 percent shortly after the open, SoftBank Group lost 11 percent and memory maker Kioxia slid 14 percent, leaving it more than 70 percent below its record high. The cost of insuring SoftBank debt against default climbed to a four year high. Markets steadied later in the session as dip buyers stepped in.
Why it matters
Korea, Taiwan and Japan carry an outsized share of the world’s AI hardware exposure, so a policy shift in Washington lands on their exchanges before anywhere else. Asia Times columnist William Pesek framed Friday as the first jolt of a Democratic AI shock, with pledged data center pauses and the possible end of tax breaks now priced into chip stocks. Analysts were split on what comes next. Mega Financial’s Allen Huang said markets are “likely in the final stage of capitulation,” while Saxo’s Charu Chanana pointed to panic in the selling. Safe havens rallied: the 10 year Japanese government bond yield fell to 1.795 percent and the yen strengthened past 158 per dollar. The next test is whether Monday brings more forced selling or a rebound led by the same chipmakers that just led the fall.