After the midterms: stock markets in the Far East with significant losses

The wave of sales from the USA has hit the technology stock exchanges in Asia. Concerns about the future regulation of AI are putting investors under pressure – how badly will chip stocks be affected?

Seoul/Tokyo/Hong Kong/Shanghai. The stock markets in the Far East have lost significantly. The wave of sales from the USA spilled over to the Asian stock exchanges. The Philadelphia Semiconductor Index suffered its worst losses since the Corona crisis in 2020 on Thursday, responding to concerns about increased regulation in the area of ​​artificial intelligence (AI).

The occasion was the victory of the Democrats in the US congressional elections. “Investors are realizing that the US midterm elections could also change the political framework for the AI ​​boom,” noted market analyst Andreas Lipkow from broker CMC Markets.

“Due to new majorities and changes in political leadership at the state level, data center projects that were previously considered safe may come under renewed scrutiny,” he said. This increases uncertainty about future investment needs and the speed of the planned capacity expansion. The valuation premiums are therefore increasingly being questioned and reduced.

Technology-heavy stock exchanges particularly under pressure

The decline was most noticeable on the technology-heavy stock exchanges in Japan, South Korea and Taiwan. The South Korean leading index Kospi fell by almost nine percent in early trading and slipped below the 5,000 point mark for the first time since February. Recently, the Kospi was able to reduce the deficit somewhat, but still lost six percent.

Stabilized US futures cushioned the losses somewhat, as market strategists at Deutsche Bank noted. This means that the index is still up a good 20 percent so far this year, but has lost almost half since its record high of almost 9,400 points in June. Even on a weekly basis, the Kospi is clearly in the red.

Memory chip producers are giving in

The shares of memory chip producers SK Hynix and Samsung fell significantly. Both papers caused the boom on the South Korean stock market in the summer. This becomes particularly clear when looking at the SK Hynix share. The situation was similar in Taiwan, where the heavyweight TSMC was a burden.

Japanese stocks also fell comparatively sharply. The Nikkei 225 ended trading almost six percent lower at 57,434.77 points. In addition to losses in the technology sector, the rise in oil prices also had a negative impact, as on the other markets. The Nikkei is also trending noticeably weaker compared to the previous week.

The Chinese stock exchanges fared somewhat better. The CSI 300 index with the 300 most important stocks from the mainland fell by 1.4 percent, the Hang Seng index of the Hong Kong Special Administrative Region fell by 1.3 percent.

The Australian S&P ASX 200 was comparatively stable. Thanks to its low dependence on the technology sector, it only fell by 0.49 percent to 9,020.80 points.