Asian Stocks Fall, South Korea’s KOSPI Falls 7% on Chip Rout, Fed Rate Fears By Investing.com

Investing.com — Asian stocks fell Thursday, led by those in South Korea, as losses in the semiconductor sector deepened on concerns about Chinese competition and stronger-than-expected U.S. inflation that raised expectations of further rate hikes from the Federal Reserve.

The KOSPI plunged 7.2%, while Japan’s fell 4.7%, extending losses in the region’s tech-heavy markets. The MSCI Asia-Pacific index fell almost 3%, putting it on track to hit its lowest level since July.

Hong Kong’s fell 1.1%, while China’s fell 1.4% and China’s fell 1.5%.

The selloff followed another session of weakness on Wall Street, where technology stocks fell 1.9% overnight. The extended its losing streak to six sessions, its longest since May 2025, while the slipped into correction territory after falling 11% from its peak.

Asian trade fell 0.9% and lost 0.4%.

With Taiwan Semiconductor Manufacturing () due to report later today, investors expect a sixth straight quarter of record profits and upbeat forecasts to reassure markets that growing demand for AI chips can support growth in the semiconductor sector.

Chipmakers lead losses as AI investments face scrutiny

South Korean memory chip makers were hit hardest by the decline, falling 11.2% and down 9.4%. That of Japan and lost more than 10%. Those of Taiwan and TSMC fell by more than 2%.

The declines extended a rout sparked by concerns about Chinese semiconductor competition, after ChangXin Memory Technologies (CXMT) moved forward on a higher-density DRAM design capable of storing more data.

Broadcom CEO Hock Tan’s warning that some AI investors are indeed gambling has added to concerns about strained valuations and whether heavy infrastructure spending will produce adequate returns.

The risks of financing AI have become more visible. Shares fell 17% on Wednesday, while the company’s debt maturing in 2032 traded below 78 cents on the dollar, compared to its original face value when investors bought the bonds four months ago.

Tech stocks from Hong Kong and mainland China also weakened sharply. MiniMax fell 8.7%, Z.AI lost 9.1%, fell 4.5%, slipped 4.4% and fell 3.1%.

High US inflation increases risks of rate hikes

Warmer-than-expected temperatures, driven in part by gasoline prices, have strengthened the case for further Fed tightening and increased the risk of further rate hikes to contain price pressures.

The figures heightened concerns that the Fed may need to tighten policy further, even though officials had hoped to take a breather after September’s rate hike, which raised the benchmark range to between 3.75% and 4.00%.

Markets raised the implied probability of a 25 basis point hike at the Oct. 27-28 Fed meeting to 31.6%, up from 22.1% the day before, while pricing in around 40 basis points of further hikes by the end of January.

Federal Reserve Chairman Kevin Warsh said he would not guide markets on his own near-term policy outlook, but his remarks Friday in Bangkok, during a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva, will be closely scrutinized.

Investors are also awaiting U.S. producer price and retail sales data on Thursday.

Meanwhile, oil prices fell on Thursday, falling $1.39 to $104.67 a barrel and falling $1.02 to $94.07.

Singapore’s fell 0.9% a day after the Monetary Authority of Singapore unexpectedly left its monetary policy unchanged. Elsewhere, those of Australia and New Zealand fell 0.1%. India’s Nifty 50 Futures rose 0.4%.