The selling also suggests investors are beginning to price in growing opposition to data centres, with markets yet to fully absorb the costs such construction has imposed on communities.
A technology stock rout that began overnight in the United States carried into Asian trading on Friday, with market authorities in South Korea briefly halting trading as prices plunged across the region. According to Al Jazeera, the selling is driven by fears that the Democrats' victory in the US midterm elections will increase regulatory scrutiny of artificial intelligence and slow the country's data centre build-out.
The numbers were severe. Japan's Nikkei index slumped 6 percent, its deepest one-day drop since April 2025, while indices in South Korea and Taiwan plunged more than 8 percent after the opening bell before cutting losses. On Wall Street the previous day, the tech-focused Nasdaq sank 5.5 percent and the volatility "fear gauge" soared, with $3 trillion wiped off S&P 500 firms, the report said. Taiwan's index closed down 4.5 percent and finished the week 12.2 percent lower, its biggest weekly decline since 1991, according to LSEG data cited by Al Jazeera.
Authorities moved quickly to contain the panic. Trading on South Korea's Kospi was temporarily suspended, and Finance Minister Lee Hyoung-il eased rules on retail investors' leveraged investments. In China, state entities stepped in to buy equities in a bid to stabilise the market, Al Jazeera's Katrina Yu reported from Beijing. The government of Taiwan, a key chip producer, sought to talk up the sector, with its economy ministry saying demand for AI, high-performance computing and cloud services is expected to keep expanding. Korean chipmakers Samsung Electronics and SK Hynix fell nearly 6 percent and 9.4 percent respectively, TSMC closed down 4.7 percent, and Japan's Kioxia and SoftBank Group each slid 11 percent.
The political shock has landed on a trade already under strain. Analysts cited in the report say jitters are hitting an AI boom whose footing was shaky amid doubts over returns on massive infrastructure spending. "The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone," Dong Baozhen, chairman of asset manager Lingtong Shengtai, told Reuters. The selling also suggests investors are beginning to price in growing opposition to data centres, with markets yet to fully absorb the costs such construction has imposed on communities.
Toby Walsh, chief scientist at the AI Institute at Australia's University of New South Wales, told Al Jazeera he expected new regulations on data centres in many countries, including the US, Australia and the UK, arguing developers built without social licence. He said the correction could benefit the industry by letting the bubble deflate in a manageable way.
What remains unconfirmed is the precise scale of any regulatory change: the report describes market expectations about Democratic scrutiny, not enacted policy. Nor is it clear how far the losses will run once US trading resumes. What the session does show is that the AI trade now carries political risk, and that Asian exporters of chips and capital equipment are the first to feel it.
