Taiwan

A tech stock rout that began overnight in the United States has persisted in Asian trading.

Market authorities in South Korea paused trading on Friday as prices plunged across the region. Global markets have been rattled by a sharp fall in the trading price of tech stocks, which is driven by fears that the Democrats’ victory in the US midterm elections will increase regulatory scrutiny of AI and slow the country’s data centre build-out.

Japan’s Nikkei index slumped 6 percent, its deepest one-day drop since April 2025. Indices in South Korea and Taiwan plunged more than 8 percent after the opening bell, before cutting losses as authorities scrambled to stem the selling.

Wall Street’s volatility “fear gauge” soared overnight on Thursday and the tech-focused Nasdaq sank 5.5 percent, wiping $3 trillion off S&P 500 firms, as investors fretted that the Democrats could put the brakes on the AI boom being 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,” Al Jazeera’s Katrina Yu reported from Beijing.

“Some of those major markets have fortunately recovered some of those losses, but all of them are still clearly in the red,” she said.

Analysts say the political jitters are hitting an AI trade already on shaky footing due to worries about returns on massive spending on related infrastructure.

“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 the Reuters news agency.

“The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped. Can AI bull markets elsewhere hold up on their own?”

Authorities step in

Markets cut some of their losses by the time Asian markets closed, as authorities worked to stem the panic.

Trading on South Korea’s Kospi market was temporarily halted amid the sharp slide. Finance Minister Lee Hyoung-il also eased rules on retail investors’ leveraged investments.

In China, state entities stepped in to buy up equities in a bid to stabilise the market, said Al Jazeera’s Yu.

The Taiwan stock market closed down 4.5 percent, recovering somewhat from its early morning slump. For the week, the index clocked a 12.2 percent decline, its biggest since 1991, LSEG data showed.

The government of the island state, a key producer of chips, sought to talk up the prospects for the sector.

Demand ⁠for emerging technologies like AI, ⁠high-performance computing and ⁠cloud services is expected to keep expanding, driving ‌demand for tech companies, the economy ministry said in a statement issued on Friday.

Korean AI chipmakers Samsung Electronics and SK Hynix fell nearly 6 percent and 9.4 percent respectively, cutting steep losses from earlier. TSMC fell as much as 8.5 percent in Taiwan, before closing down 4.7 percent.

In Japan, Kioxia plunged 11 percent while AI investor SoftBank Group slid 11 percent.

New regulations

The selling indicates investors are starting to factor in increased opposition to data centres. Analysts say markets have yet to fully consider the cost such building work has imposed on communities.

Toby Walsh, the chief scientist for the AI Institute at Australia’s University of New South Wales, said he expected new regulations on data centres in many countries, including the US, Australia and the United Kingdom.

“The developers were building them in a way that wasn’t actually getting social licence,” Walsh told Al Jazeera.

“They were building them in places where they didn’t need to build. You don’t have to build data centres in urban areas. You can build them in the middle of nowhere.

“I think it’s actually for the good of the tech industry in the United States that this has happened,” he added. “We’re spending money a bit too quickly. And maybe this is the way to let that bubble deflate in a manageable way.”

Authorities warn of ‘destructive winds’ and urge residents to shelter as the storm passes the island’s northeast.

Typhoon Champi has struck Taiwan, killing one person and injuring at least 350 others, as authorities warned of “destructive winds” and instructed people to stay indoors.

The storm swept past the island’s northeast on Friday, toppling trees, shutting shops and schools, cutting power to thousands of households, and forcing more than 4,300 people to evacuate from their homes.

Champi is heading towards China and Japan, forcing the cancellation of hundreds of flights in the region.

“From tonight through tomorrow morning conditions will be very windy and stormy everywhere,” Central Weather Administration (CWA) forecaster Lin Ping-yu said in a briefing. “Please try to stay indoors.”

Champi was briefly a super typhoon with winds of nearly 300 kilometres per hour (186 miles per hour) but has since weakened. The US Joint Typhoon Warning Center reported maximum winds of 185km/h (115mph).

Worse is still expected to come on Saturday. Champi could drop up to 900mm (35 inches) of rain between Thursday and Saturday, with the northeast hit hardest, the CWA said. More than 400mm fell in Yilan County on Friday.

CWA forecaster Lu Kuo-chen said the typhoon could slow near the island’s northeastern tip, prolonging its impact.

About 8,400 households in Japan’s Okinawa islands were without power on Friday afternoon, according to the Okinawa Electric Power Company. Champi is forecast to hover near Okinawa and then China’s eastern coast before turning northeast towards mainland Japan.

Champi is the latest storm in a Pacific season supercharged by El Nino.

The United Nations said on Wednesday that El Nino, a natural cycle that warms the tropical Pacific, is heading off the charts.

“The current El Nino event could be unprecedented in strength. Literally off the monitoring charts that we have used for the past four decades,” said Celeste Saulo, secretary-general of the World Meteorological Organization.

It is expected to peak in December, with its impact lasting into 2027 and beyond.