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.

Chinese foreign ministry cites national sovereignty and Taiwan separatist activities as reasons behind the measures.

China has sanctioned Paraguay’s communications minister and Belize’s foreign minister over ties to Taiwan.

The Chinese Ministry of Foreign Affairs made the announcement on Monday, citing the safeguarding of China’s national sovereignty and opposition to Taiwan separatist activities as the reasons behind the measures, which went into effect the same day.

The measures against Paraguay’s Communications Minister Gustavo Villate and Belize’s Foreign Minister Francis Fonseca include the freezing of their assets in China and the denial of entry visas to Hong Kong and Macau.

The sanctions also prohibit Chinese organisations and individuals from engaging in transactions, cooperation or other activities with the ministers.

The Foreign Ministry said that “certain anti-China politicians” who are “driven by self-interest” have pushed their nations to maintain diplomatic relations with Taiwan.

Beijing said the ministers had “taken a series of egregious actions and statements”, which are “damaging China’s core interests”.

Paraguay and Belize are two of 12 countries that maintain formal diplomatic relations with Taiwan.

China views Taiwan as its territory, a view the island’s government strongly rejects.

The measures come two days after Taiwan’s National Day celebration.

In a National Day speech outside the Presidential Office on Saturday, Taiwan President William Lai Ching-te said the island “cherishes peace” and will “not give up our freedom”.

China’s Taiwan Affairs Office condemned Lai’s speech, saying it “disregards facts, ⁠distorts the truth, misleads the public, and reveals ulterior motives”.

In January, Chinese President Xi Jinping pledged to achieve the “reunification” of China and Taiwan, calling the goal “unstoppable”.

Diplomatic relations

Paraguay’s Communications Minister Villate marked Taiwan’s National Day with a social media post, saying: “Paraguay reaffirms its relationship of friendship and cooperation, based on shared values and principles: the self-determination of peoples, human rights and democracy.”

The Belize embassy in Taiwan also posted a message on its Facebook celebrating the 37th anniversary of their diplomatic relations.

“Together, we look forward to a future of growth, opportunity, and lasting friendship,” the embassy wrote.

Last month, Taiwan’s Foreign Minister Lin Chia-lung visited Belize. His ministry said the two sides had agreed to deepen ties.

Taiwan’s other allies in the Americas include Guatemala and Haiti. It also has formal diplomatic ties with three Caribbean islands.

The United States does not have ⁠formal diplomatic ties with Taiwan, but Washington is bound by law to provide the island with the means to ‌defend itself.

Earlier this month, the US delivered two fighter jets to Taiwan as the island seeks to build its defence capabilities to deter a feared attack from China.

President Lai emphasises peace and freedom, vows not to tolerate aggression in Taiwan Strait.

Taiwan’s President Lai Ching-te has said the island “cherishes peace” and will “not give up our freedom” in a National Day speech outside the Presidential Office in Taipei.

Lai made the remarks on Saturday before thousands of people, including foreign diplomats.

“We are open to exchanges, but will not accept subordination,” he said. “Our aim by increasing investment in national defence is not to provoke; rather, it is to deter war.”

Taiwanese fighter jets and two Chinook helicopters carrying giant Taiwan flags flew over the capital ahead of the speech.

The holiday marks the 115th anniversary of a 1911 uprising that toppled China’s last imperial dynasty and led to the founding of the Republic of China.

Pressure from China

Taiwan’s 23 million people live under the constant threat of an attack by China, which insists the island is part of its territory, has never renounced the use of force to take it, and calls Lai a “separatist”.

Beijing has rebuffed his offers of talks.

Lai said China continued to “apply pressure through military and grey-zone activities in an attempt to alter the status quo across the Taiwan Strait”.

Grey-zone tactics are actions that stop short of open war. “Peace cannot rely solely on wishes, and tolerance cannot become a pretext for aggressors to encroach ever further,” he added.

Lai’s government has set aside a record 1.1 trillion New Taiwan dollars ($34.5bn) for defence in 2027, more than 3 percent of gross domestic product.

China held war games around the island shortly after Lai’s first National Day speech in 2024, but not last year. Its last drills near Taiwan were in late December, after news of an $11bn arms deal with Washington, the largest ever US weapons package for the island.

Lai said he welcomed talks between the United States and China, but insisted “there must be respect for the right of the people of Taiwan to exist”.

He urged democracies in the Indo-Pacific to join forces to preserve peace and stability in the region.

The US switched official diplomatic relations from Taipei to Beijing nearly 50 years ago but remains Taiwan’s most important security backer.

Officials in Washington and Taipei have repeatedly said US policy on Taiwan has not changed under President Donald Trump.

In May, after meeting Chinese President Xi Jinping in Beijing, Trump suggested arms sales to Taiwan could be a bargaining chip with China, which set off alarm across the world.

Taiwan is now waiting for Trump to sign off on $14bn worth of weapons, including the US-made Patriot air defence system.

The dispute dates back to China’s civil war, when the nationalist forces of Chiang Kai-shek retreated to Taiwan in 1949 after defeat by Mao Zedong’s communists.

The Republic of China remains the island’s formal name.