Asian markets tumble as US AI regulatory fears trigger tech sell-off
Tech stocks fell sharply across Asia after a US-originated sell-off sparked by concerns that a Democratic win could tighten AI regulation and slow data-centre expansion.
Asian equity markets continued to slide on Friday after a tech-stock rout that began in the United States. Japan's Nikkei dropped 6 percent, its steepest one-day decline since April 2025, while South Korean and Taiwanese indices fell more than 8 percent before trimming losses as regulators intervened.
The sell-off follows fears that a Democratic victory in the US midterm elections could increase scrutiny of artificial-intelligence projects and curb the expansion of data centres, potentially dampening the AI boom encouraged by President Donald Trump.
"It was a brutal morning for many investors here in Asia. We saw that the AI sell-off continues here across many countries," reported Al Jazeera correspondent Katrina Yu from Beijing.
"Some of those major markets have fortunately recovered some of those losses, but all of them are still clearly in the red," Yu added.
Asset-manager Lingtong Shengtai chairman Dong Baozhen told Reuters that AI stock valuations had been based on overly optimistic expectations and that the US market’s slowdown could test the resilience of AI-focused equities elsewhere.
South Korean authorities temporarily halted trading on the Kospi and eased rules on leveraged retail investments, while Chinese state entities purchased equities to stabilise markets. Taiwan’s index closed down 4.5 percent after an early-morning plunge, marking a weekly decline of 12.2 percent, the largest since 1991, according to LSEG data.
Key chipmakers also fell sharply: Samsung Electronics and SK Hynix dropped about 6 percent and 9.4 percent respectively, TSMC fell up to 8.5 percent before ending the session down 4.7 percent, and Japan’s Kioxia and SoftBank Group each slid 11 percent.
AI researchers warned that upcoming regulations on data-centre construction could further pressure the sector. Toby Walsh, chief scientist at the AI Institute of the University of New South Wales, said new rules are likely in the United States, Australia and the United Kingdom, noting that many data centres had been built without adequate community support and that a slower rollout might help deflate the current market bubble.