Tech Stocks Plunge as US Midterm Results Fuel Fears of Tighter AI Regulation
Technology shares tumbled across Asia on Friday after a Wall Street rout, as investors worried that Democrats' strong midterm showing will bring tougher rules for the artificial intelligence industry. The Nasdaq fell 5.5 percent.
Technology stocks plunged across Asian markets on Friday, 6 November, following a sharp sell-off on Wall Street. Investors fear that the Democrats' decisive win in this week's US midterm elections will lead to tighter regulation of the artificial intelligence (AI) industry, a sector that had driven stock markets to record highs only five months ago.
The US sell-off
On the New York exchange, the Nasdaq lost 5.5 percent, its worst day in percentage terms since April last year, when President Donald Trump announced sweeping global tariffs. The S&P 500 dropped more than four percent and the Dow more than three percent. Bloomberg reported that the Philadelphia Semiconductor Index had fallen around 16 percent this week.
Trump blamed the Democrats for the decline in a post on his Truth Social platform.
Losses in Asia
Seoul and Tokyo bore the brunt. South Korea's Kospi fell almost nine percent at one point, with chipmaker SK hynix down 10 percent and Samsung down eight percent. The Kospi had more than doubled between the end of December and mid-June, and has since lost almost 50 percent. Tokyo dropped seven percent, while Taiwan's Taiex fell about eight percent as TSMC slid seven percent. Hong Kong, Shanghai, Sydney and Singapore all lost more than one percent.
Why investors are worried
Data centres face broad opposition among US voters across the political spectrum, and many midterm winners have pledged to slow such projects. Analysts said investors were also unsettled by Senator Bernie Sanders' call for a national moratorium on data centre construction. Additional concerns include the hundreds of billions of dollars invested in the sector, uncertainty over when returns will materialise, and a recent rise in borrowing costs.
Michael Hewson of MCH Market Insights said the Texas results raised fears that politicians there might target Elon Musk's Tesla and SpaceX. Neil Wilson of Saxo Markets called the sell-off overdone but said stability must come first.
Markets were also affected by a further rise in oil prices, as traders watch developments in the US war with Iran. US jobs data is due later on Friday.
