The sell-off of technology stocks swept across the Asia-Pacific stock markets, with South Korean stocks plummeting nearly 9%, triggering a circuit breaker, and the Nikkei falling below 60,000 points, entering a technical bear market

The Democratic Party's significant victory in the U.S. midterm elections has raised concerns about tighter regulation of artificial intelligence, leading to a severe sell-off in tech stocks, with the shockwaves quickly spreading to the Asia-Pacific markets.

On Friday morning, the MSCI Asia-Pacific Index fell 3% to 247.75 points. The Korea Composite Stock Price Index plummeted 8.8%, breaking the psychologically significant 5000-point mark and triggering a circuit breaker. The Nikkei 225 Index dropped over 5%, falling below 60,000 points during the session, marking a decline of more than 20% from its June peak, officially entering a technical bear market.

This round of sell-off originated from Wall Street's "AI crash" the night before. The Nasdaq 100 Index plummeted 6.4% on Thursday, evaporating $2.3 trillion in market value in a single day, marking the worst single-day performance since March 2020; the S&P 500 Index fell 4.4%, the largest single-day drop since the tariff shock in April 2025.

The Democratic Party swept both houses of Congress and won gubernatorial seats in key states like Texas, sharply increasing market concerns about a slowdown in data center construction. The Philadelphia Semiconductor Index has already dropped about 16% this week, marking its worst weekly performance since April 2024.

At the macroeconomic level, the market is currently awaiting the October non-farm payroll report to be released on Friday, with the Dow Jones consensus expecting an increase of 59,000 jobs and the unemployment rate to remain unchanged at 4.2%. Previously released data showed that the number of initial jobless claims in the U.S. fell to 189,000, below all economists' forecasts.

Chip Giants Hit Hard, Over $1 Trillion in Market Value Evaporated

Asian chip stocks continued the overnight decline of U.S. stocks on Friday. Within the tech sector, AI supply chain companies suffered the most severe impact.

The Korea Composite Stock Price Index plunged 8.55%, with individual stocks generally falling between 12% and 17%. The index breaking below 5000 points has special market significance. South Korean President Lee Jae-myung had set 5000 points as a recovery target when the index was around 2500 points, and breaking that level was once seen as a milestone for the South Korean market.

Now that it has quickly fallen below this level, it not only undermines this symbolic significance but also raises doubts about whether the previous upward trend can be sustained— the Korea Composite Stock Price Index has now erased all gains made since the end of the Iran War.

Previously boosted by the AI data center construction boom, leading power equipment company Xingsheng Heavy Industry (-16.86%) and SANIL ELECTRIC (-13.02%) faced concentrated sell-offs and valuation declines.

As a major shareholder of SK Hynix, SK SQUARE plummeted 13.47%, while semiconductor equipment manufacturer MIRAE dropped 17.04%, leading the market decline. Electronic components and packaging leader Samsung Electro-Mechanics fell 14.30%, and Sanhe Electric also dropped 12.75%.

With market risk appetite collapsing, brokerage and investment institutions' proprietary business and commission expectations worsened, leading to a 13.87% plunge in the securities holding giant Korea Investment Holdings.

Both Samsung Electronics and SK Hynix fell over 10%.

Japanese stocks in AI computing power and the entire semiconductor industry chain also faced heavy selling. The Tokyo Stock Exchange Index fell 5.1%, and the Nikkei 225 Index dropped nearly 5.8%.

Japanese semiconductor core equipment and technology investment giants led the decline. Testing equipment monopolist Advantest plummeted 15.38%, leading the market; thin-film deposition equipment manufacturer Tokyo Electron fell 14.89%; and Japanese semiconductor equipment leader Tokyo Electron dropped 12.56%. Technology investment bellwether SoftBank Group was pressured by global tech stock risk aversion, crashing 14.25% in a single day.

Upstream materials and chip manufacturing were not spared. Semiconductor materials and components faced concentrated liquidation, with sputtering target giant JX Metals plunging 14.52%, electronic materials company Mitsui Mining & Smelting dropping 13.91%, and wafer manufacturer Shin-Etsu Chemical falling 13.63%. Graphite material supplier Tokai Carbon and ABF insulation film giant Ajinomoto fell 12.42% and 11.66%, respectively. Additionally, automotive chip giant Renesas Electronics also saw a significant drop of 11.45%.

U.S. Stock Futures Stabilize, Non-Farm Data Becomes Next Focus

Notably, as the Korean and Japanese stock markets opened with sharp declines, U.S. stock futures showed a slight rebound. Nasdaq futures briefly turned positive, and S&P 500 E-mini futures also narrowed their losses, indicating that some investors began to buy on the dip.

Victoria Greene, Chief Investment Officer of G Squared Private Wealth, stated in an interview with CNBC that this drop has created a buying opportunity. She said:

AI trading, in my view, has not come to an end; now is a good discount.

She expressed interest in memory stocks, citing the capacity shortage issue mentioned by management teams of several companies during this earnings season, and added:

Buying stocks that have sharply declined is usually the right choice in a non-recession period.

Another focus for investors is the U.S. October non-farm payroll report to be released on Friday. The market consensus from the Dow Jones survey expects an increase of 59,000 jobs, with the unemployment rate remaining unchanged at 4.2%.

Meanwhile, Federal Reserve Cleveland President Beth Hammack stated that interest rates need to remain at restrictive levels to drive inflation back to target, and more frequent adjustments would help reduce the risk of policy lagging behind the situation.

Bloomberg strategist Mark Cranfield pointed out that in the current market environment, early soothing voices from government and exchange officials can be expected, attempting to characterize this decline as a normal market correction, "the key is whether this information can be accepted by the market."

Safe-Haven Assets Strengthen, Oil Continues to Rebound

On Friday during the Asia-Pacific session, gold received significant support in early Asian trading, with spot gold prices briefly returning above $4100 per ounce, accumulating an increase of nearly 6% this week.

The yield on 10-year U.S. Treasury bonds rose slightly by 0.9 basis points, maintaining around 4.83%.

The yen strengthened slightly to 157.65.

Oil prices also strengthened, with WTI crude oil rising 0.62% to $91 per barrel in early trading on Friday, after rebounding nearly 3% on Thursday.

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