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Asian stock markets tumbled sharply on Friday as fears over tighter US regulation of artificial intelligence rattled investors across the region. The selloff followed a steep decline on Wall Street, triggered by the Democratic Party’s sweeping victory in this week’s US midterm elections and growing concern about what that result means for the AI industry.
Tech Stocks Bear the Brunt
Seoul and Tokyo suffered the heaviest losses in early trading. South Korea’s Kospi plunged nearly nine percent at one point. Chip maker SK Hynix fell ten percent, while Samsung dropped eight percent. The Kospi had more than doubled between late December and mid-June, when it reached a record high. Since then, it has lost almost half its value.
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Tokyo also dived seven percent. Kioxia and SoftBank each shed more than ten percent, while Advantest fell over eight percent. In Taiwan, a seven-percent drop in TSMC dragged the Taiex index down around eight percent. Hong Kong, Shanghai, Sydney, and Singapore all declined more than one percent. Wellington and Manila also closed in negative territory.
Democrats’ Win Sparks Regulatory Fears
Investors initially welcomed the Democratic “blue wave” on Tuesday, hoping it might pressure President Donald Trump to ease tensions with Iran. However, concern about AI regulation quickly overshadowed those hopes. Data centres have faced broad opposition from voters across the political spectrum. Many newly elected candidates pledged to restrict such projects during their campaigns.
Analysts noted that a call from progressive Senator Bernie Sanders for a national moratorium on data centre construction added to investor anxiety. Michael Hewson at MCH Market Insights said investors were selling because of “concerns that we might see greater opposition to AI buildout plans, with the results in Texas prompting concerns that politicians in the state might target Elon Musk’s Tesla and SpaceX due to his support for Trump.”
Wall Street Leads the Decline
On Wall Street, the Nasdaq plunged 5.5 percent — its worst single-day percentage drop since April last year, when Trump announced sweeping global tariffs. The S&P 500 fell more than four percent, and the Dow dropped over three percent. Bloomberg reported that the Philadelphia Semiconductor Index collapsed around 16 percent across the week, putting it on track for its worst weekly performance since April last year.
Trump blamed the market collapse on the Democrats. Writing on Truth Social, he said: “The Stock Market crashed today because the Dumocrats had a big Tuesday — So sad to see, you only have yourselves to blame! President DONALD J. TRUMP.”
Meanwhile, Neil Wilson at Saxo Markets described the mood bluntly. “The blood is in the streets, folks,” he said. “The fear is a total momentum unwind as Democrats pace the frontier and kibosh data centre buildout… this looks totally overdone but the nature of sell-everything of this market means we need to look for some stability first.”
Beyond AI regulation fears, rising oil prices and uncertainty over the Iran situation also weighed on sentiment. US jobs data is due later in the day, following broadly positive economic readings earlier in the week.
