Asian stocks rebound after AI rout

econews. Asian tech stocks rebounded on Monday after a bruising AI sell-off last week pushed many of the region’s leading bourses into technical bear markets. Gains were strongest in Taiwan, where the Taiex benchmark jumped 4.9 per cent after the government announced market support measures, including curbs on short selling, on Friday. TSMC, the world’s largest contract chipmaker and the index’s biggest constituent, rose 4.7 per cent. In Japan, the tech-heavy Nikkei 225 index gained 2.3 per cent. The stocks of Samsung Electronics and SK Hynix, the two biggest AI memory-chip makers, edged up 0.6 per cent and 0.4 per cent respectively, while South Korea’s overall Kospi slipped 0.8 per cent. The recovery came after sharp drops last week on fears that Democratic wins in US midterm elections would slow the build-out of AI data centres, to which Asian companies have been big suppliers. Friday’s declines were the largest since market ructions that followed US President Donald Trump’s “liberation day” tariffs in April 2025. They pushed many of Asia’s tech-heavy indices into technical bear markets, meaning they were down more than 20 per cent from their most recent peaks.

Future contracts indicated US stocks would extend their recovery when Wall Street opens on Monday, with those tracking the S&P 500 up 0.3 per cent while those for the Nasdaq 100 were flat. Analysts said there was evidence of a broad rotation out of Asian tech stocks linked to the US build-out, including Samsung Electronics, SK Hynix and TSMC. “Investors are trying to rebalance their positions in a very rapid manner,” said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas. “July was the peak of broad-based buying in Asia tech. Investors have become more selective.”

Lui said Democratic wins in US states with heavy data centre construction, such as Texas, had added to “uncertainty, particularly on the regulatory front”, adding: “Investors are trying to take a closer look at the valuation of the frontier labs.” Joshua Crabb, head of Asia-Pacific equities at Robeco, said investors should diversify from AI-linked companies, noting that India, south-east Asia, Hong Kong and Australia offered opportunities, given their lack of AI-exposed companies. “They do not have that huge AI part of the market,” he said. “Those markets can benefit relatively.”