Japan's Nikkei 225 plunged as much as 7 per cent on Friday as fears of an abrupt end to the AI investment boom and a huge overnight sell-off on Wall Street triggered a renewed collapse of technology stocks across Asian markets. Massive drops for Japanese AI bellwethers, including Soft Bank and Kioxia, sent the Nikkei below the 60,000 point level for the first time since May. The broader Topix shed 5.8 per cent, with almost no stocks rising in a morning session described by traders in Tokyo as "complete carnage".
The flight from risk triggered strong buying of Japanese government bonds, with yields on the 10-year note falling 8.5 basis points to 2.67 per cent. Traders also voiced concerns that several Asia-based hedge funds had been wiped out by the previous 48 hours of market mayhem, pointing to Thursday's 17 per cent surge in Toyota shares. The jump, triggered by hopes that the swing against Donald Trump in the US midterms would lift some tariffs, was the biggest single-day rise since 1987 and hurt funds shorting the carmaker.
The wider tech sell-off, which analysts said was triggered by concerns that Democratic wins in key states would mean heavier regulation of AI and data centres, has fed broader worries that the global rally was overdue a correction. "What we are seeing is the effect of too much investment concentration unwinding too fast," said the Tokyo-based head of trading at one international bank.
In South Korea, circuit breakers halted trading for 20 minutes as the Kospi Composite index tumbled 8.5 per cent to below 5,000 points for the first time in nine months. Samsung Electronics and SK Hynix slid 9.9 per cent and 11.7 per cent, respectively, on concerns that memory-chip demand could weaken. Some analysts, however, did not expect a significant cut in AI infrastructure spending, arguing that hyperscalers would shift data centre builds to other US states or countries.
Source: Financial Times Companies · Summarized by HeadlinesBriefing