Stock markets in the Asia-Pacific region faced severe pressure on Thursday morning trading. Benchmark indices across various countries plummeted following a massive sell-off hitting tech giant stocks, particularly in the semiconductor sector, which had previously rallied due to artificial intelligence (AI) euphoria.
The steepest decline was recorded by South Korea's KOSPI index, which plunged by more than 7 percent, followed by Japan's Nikkei 225 index, which corrected over 3 percent. This negative sentiment also spread into the red zone for other major indices such as China's Shanghai, Singapore, and Australia.
Shares of leading South Korean memory manufacturer SK Hynix led the drop, plummeting more than 9 percent and erasing gains made in the previous trading session. This movement was followed by its domestic rival Samsung Electronics, which corrected by more than 7 percent, as well as significant declines in Japanese tech issuers like Advantest and SoftBank Group.
This sharp correction in Asian markets was a ripple effect from Wall Street's slump the previous night, where US chipmaker stocks like Micron Technology and Intel dropped sharply. Analysts attribute the decline to concerns over semiconductor valuations being overextended after a prolonged rally, as well as a proposed moratorium on new data centers in New York due to environmental concerns.
Although Dutch lithography machine maker ASML reported a strong annual revenue projection, it was unable to stem the market's negative sentiment. Market participants are now taking a realistic view of the concentration level of tech stocks in global indices, which are currently seen as saturated and vulnerable to price corrections.
