Asian AI Sell-Off Puts State Power and Markets on Edge

Asian technology shares plunged on Friday, Nov. 6, as investors reacted to fears that a Democratic victory in the U.S. midterm elections could bring more scrutiny of artificial intelligence and slow data-center construction. The market’s response was immediate: Japan’s Nikkei 225 dropped 6%, South Korea’s Kospi fell as much as 8.8% and triggered a trading halt, and Taiwan’s Taiex fell around 9% in morning trading.

The sell-off hit markets built around huge expectations for AI and infrastructure spending. For investors and companies, the sudden fall carried a clear message: political decisions about regulation, and doubts about corporate plans, can send billions in market value sliding. Ordinary retail investors weren’t outside that machinery. South Korea’s finance minister eased rules on their leveraged investments as authorities moved to stem the selling.

When markets seize up

South Korea’s Kospi trading was temporarily halted after its steep decline. Finance Minister Lee Hyoung-il eased rules on retail investors’ leveraged investments, while state entities in China bought equities in an effort to stabilise the market, Al Jazeera’s Katrina Yu reported from Beijing. Taiwan’s government also sought to reassure investors.

The Taiwan economy ministry said in a Friday statement that demand for emerging technologies such as AI, high-performance computing and cloud services was expected to keep expanding and drive demand for technology companies. That was the official reassurance. The market kept its own score: Taiwan’s Taiex closed down 4.5%, lost 12.2% for the week, its biggest weekly decline since 1991 according to LSEG data, and entered a bear market.

Japan’s Nikkei 225 recorded its deepest one-day fall since April 2025. The MSCI Asia Pacific Index tumbled 4%, Bloomberg reported. Asian markets recovered some losses before closing, as authorities moved to stem the selling, but the major markets remained in the red, Yu said.

The AI boom meets its bill

The slide followed an overnight decline on Wall Street. The tech-focused Nasdaq fell 5.5%, wiping $3 trillion off S&P 500 firms, while Wall Street’s volatility “fear gauge” rose. Investors worried that Democrats could increase scrutiny of AI and put the brakes on the AI boom encouraged by President Donald Trump. They also questioned whether heavy infrastructure spending would deliver returns and whether data-center construction could face delays.

The sell-off landed directly on companies tied to the boom. South Korean AI chipmakers Samsung Electronics and SK Hynix fell nearly 6% and 9.4%, respectively, after steeper earlier losses. Bloomberg said both lost more than 6%. Taiwan’s TSMC fell as much as 8.5% before closing down 4.7%. In Japan, Kioxia plunged 11% and AI investor SoftBank Group slid 11%.

“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. He said the U.S. stock market had been “the standard-bearer and backbone of the global AI bull run” and asked whether AI bull markets elsewhere could hold up on their own.

Who gets to build, and where

Toby Walsh, chief scientist for the AI Institute at Australia’s University of New South Wales, said he expected new data-center regulations in many countries, including the United States, Australia and the United Kingdom. He said developers had been building facilities “in a way that wasn’t actually getting social licence” and 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,” Walsh told Al Jazeera. He said the pullback could benefit the tech industry in the United States, adding, “We’re spending money a bit too quickly. And maybe this is the way to let that bubble deflate in a manageable way.”

Katrina Yu described “a brutal morning for many investors here in Asia” and said the AI sell-off continued across many countries. Some major markets recovered some losses, she said, “but all of them are still clearly in the red.”