Stock markets in Asia plunged Friday, following a tech-led sell-off in the US on anticipation that newly elected Democratic officials could stymie an AI investment boom that’s driven global stocks to record highs.
South Korea’s Kospi index dropped more than 8% after opening, triggering a halt in trading on the exchange, while Japan’s Nikkei 225 index fell about 6%.
Asian tech companies, which play an integral role in the global electronics supply chain, have been buoyed by insatiable demand for components such as semiconductors needed to build massive AI data centers. Some economists estimate that AI infrastructure led by US tech giants including Nvidia could reach $1 trillion a year in the coming years.
However, backlash against the environmental and community impact of new data centers turned AI spending into a key issue in the US midterm elections. Democrats won control of the House of Representatives and the Senate, and flipped several other contested state seats.
That sweeping victory has spurred concerns that Democratic representatives could now block or slow spending on new AI infrastructure, stalling a key driver of economic growth for both the US and Asia.
The recent volatility also builds on a year of sharp swings for some Asian markets, particularly the Kospi, as investors have grappled with the sustainability of the AI boom, as well as the ultimate profitability of such steep investments.
