Global AI sell-off deepens as Asian markets collapse

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Massive selling by semiconductor groups shook global stock markets on Thursday, as growing concerns about inflation and AI groups’ future profits hit stocks and pushed investors toward safe-haven assets.

In Seoul, the Kospi, a semiconductor supplier, fell 8 percent, triggering a trading halt, with flagship stocks SK Hynix falling nearly 11 percent and Samsung Electronics falling 9.3 percent.

In Tokyo, the Nikkei 225 fell 5.3 percent, with OpenAI investor SoftBank losing almost 10 percent and semiconductor and memory maker Kioxia losing 11 percent.

“People are just a little panicked right now,” said Song Zhe of BNP Paribas Asset Management.

Bond markets have recovered, a sign that investors are turning to less risky assets. Yields on 10-year U.S. Treasury notes fell 0.09 percentage points to 5.1 percent, while those on Japanese government bonds fell 0.07 percentage points to 2.92 percent. Bond yields move inversely to prices.

The dollar weakened 0.6 percent against a basket of key trading partners, with the yen and euro strengthening.

Chinese stocks were also hit, with Shanghai’s CSI 300 index falling 1.8% to its lowest level since August 2025.

The tech-heavy Star 50 index lost 2.4 percent, giving up all its gains for the year, while Hong Kong’s Hang Seng index slipped almost 1 percent.

“This is a positioning mainly exercised by institutional investors in China, such as insurance companies. They have to sell in a bear market,” Song said.

US markets are expected to open lower, with Nasdaq futures down 1.1 percent after the tech-heavy index finished 2 percent lower on Wednesday. S&P 500 futures were down 0.5 percent after the index finished down 1.1 percent.

Rising fuel prices triggered by the war in Iran pushed U.S. inflation to a higher-than-expected 3.7 percent rate in September, data showed Wednesday.

Hao Hong, chief investment officer of hedge fund Lotus Asset Management, said the high inflation rate, along with Anthropic’s lower-than-expected profits, had hurt confidence in AI-related businesses.

The declines in Korea follow a historic AI-driven rally that made the Kospi one of the hottest markets in the world, with the index rising from less than 2,300 points in April 2025 to more than 9,300 in June.

Since their peaks, shares of SK Hynix have collapsed nearly 58 percent, while those of Samsung Electronics have fallen 44 percent.

BNP’s Song added that China’s CXMT’s announcement of advances in cutting-edge DRam chip technology had added to the industry’s long-term concerns.

“This year we have been reminded again and again … that China is really a serious player in chip manufacturing and also in the development of AI,” he said. “You should look at China as a serious player in chip manufacturing and also in AI.”

Other AI-related stocks were also hit hard in South Korea on Thursday, with Samsung Electro-Mechanics, a supplier of AI server components, down 15 percent. Hyosung Heavy Industries, which benefited from growing demand for power equipment for data centers, fell 13 percent.

Chan Lee, of Petra Capital Management in Seoul, said the Korean selloff appeared to be more due to foreign capital outflows “rather than a fundamental change in AI’s long-term outlook.”

Steve Donzé, head of investments at Pictet Asset Management Japan, said nervousness was growing as the US midterm elections approach.

“It is believed that the US administration, in its current form, is the most AI-friendly administration that one can think of,” he said. “Any deviation from this unity of Congress and the executive branch as the midterm elections approach could involve risks for AI regulation.”

Additional reporting by Harry Dempsey in Tokyo