Asian stock markets plummet amid fears over AI investments
Asian stock markets suffered a massive drop on October 15 due to a sell-off of technology company stocks. The exchanges of South Korea, Japan, and Taiwan incurred losses the most. Investors are cutting back investments in chipmakers amid accelerating inflation in the US and doubts about the return on large-scale investments in artificial intelligence.
Yonhap, Focus Taiwan, and The Guardian report.
The South Korean stock market was hit hardest. The KOSPI index dropped 7.57%, or 454.59 points, to 5,554.22 at closing. The decline continued for a seventh consecutive trading session, the longest streak of losses since September 2024.
The situation was even worse during the day. When the KOSPI decline exceeded 8%, the Korea Exchange activated its automatic protection mechanism for a crash and suspended trading for 20 minutes. The exchange also temporarily restricted program trading earlier.
Semiconductor manufacturers sustained the most losses. Samsung Electronics' shares fell 9.48% and SK Hynix fell 11.06%. Samsung Electro-Mechanics stock lost 15.36%.
Foreign investors sold a net 3.62 trillion won (about $2.7 billion) of South Korean stocks during the day. The large capital outflow increased pressure on the market.
Japan's Nikkei 225 finished trading down 4.9%, to 64,425.95 points. It lost more than 3,300 points in one day—the third-largest single-day point decline in the index's history.
Companies under pressure included SoftBank Group, Tokyo Electron, and Kioxia. All are related to AI infrastructure development or semiconductor manufacturing.
Taiwan's Taiex also ended the day with a significant drop—by 3.41%, or 1,655.96 points, to 46,969.87 points. Selling pressed large tech companies, including Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's key suppliers of advanced processors for AI.
The new wave of sell-offs was caused by US inflation data. Statistics published on October 14 showed consumer prices rose 3.7% year-over-year in September, versus 3.6 % forecast. Monthly inflation was 0.6%.
These figures strengthened expectations that the US Federal Reserve may continue raising interest rates. More expensive borrowings increase the cost of financing investments, especially massive projects to build data centers and develop AI.
The sell-off on Asian exchanges followed a drop in the US stock market. On October 14, the tech-heavy Nasdaq Composite lost 1.88% and the broad S&P 500 lost 1.11%.
An additional factor was reassessing the industry’s profitability outlook for AI investments. Investors increasingly doubt whether multibillion-dollar spending for computational infrastructure can deliver the expected financial results.
Daishin Securities analyst Lee Kyung-min noted that the Korean market is simultaneously pressured by doubts about the ROI of AI, intensifying competition among memory producers, and rising cost of borrowings.
Earlier, on October 13, Samsung and SK Hynix shares plummeted following news of technology development by China's ChangXin Memory Technologies (CXMT). The current drop shows sell-offs extending beyond individual memory producers into the wider Asian tech sector.
Sources: Yonhap, October 15, Single Taiwan, The Guardian