Kospi Halted as Asian Chip Stocks Follow Nasdaq Into AI Regulation Sell-Off

The benchmark opened 2.24% lower at 5,263.26 and then dropped below 5,000 for the first time in 10 months, according to the Korea Times. A sidecar that suspends program trading for five minutes was triggered three minutes after the open, the paper said, and Reuters reported that the deeper fall later set off a circuit breaker that halted trading for 20 minutes. SK Hynix was down 11.71% and Samsung Electronics 9.98% as of 9:30 a.m. Seoul time, according to the Korea Times. LG Innotek and LG Display fell 10% and 7.7% respectively, CNBC reported.

The losses matter well beyond Seoul. The two Korean memory makers and Japan's chip equipment suppliers are among the biggest beneficiaries of the data centre spending by US technology companies that has driven the AI trade. Investors are now pricing in the risk that Democratic gains in Tuesday's US midterm elections lead to tighter rules on AI and on the data centres that run it, slowing that spending.

In Tokyo, chip-testing equipment maker Advantest dropped 12.2% and Tokyo Electron slid 7.3%, according to CNBC. SoftBank Group, one of the largest investors in AI companies, fell 11.6%. Memory maker Kioxia Holdings lost nearly 10% and Renesas Electronics 7.5%. Australian shares also fell below the 9,000 level as miners and technology stocks came under pressure.

Asia's slide followed a 5.5% fall in the Nasdaq Composite on Thursday that left the index more than 10% below its recent peak, the conventional definition of a correction. The Philadelphia Semiconductor Index dropped 12.2%. Companies in the Nasdaq Composite lost $2.5 trillion in market value in the session, AFP reported.

The reaction was delayed. Markets rallied on Wednesday as election results came in, then turned sharply lower on Thursday as investors weighed what a Democratic Congress and a group of new Democratic governors could mean for the AI build-out. Several winning candidates, including Texas governor-elect Gina Hinojosa, have backed moratoriums on new data centres. Of 45 local ballot measures on data centres, 33 will restrict development, according to a tally compiled by Redbud Consulting and cited by The Verge.

President Donald Trump blamed voters for the rout. "The Stock Market crashed today because the Dumocrats had a big Tuesday — So sad to see, you only have yourselves to blame!" he wrote on Truth Social on Thursday night, according to Axios.

The sell-off is also weighing on the largest share sale on the calendar. Anthropic is aiming to list in the week of November 16 and had been expected to raise up to $100 billion. Three major investors who plan to take part told the Wall Street Journal that the valuation would probably need to come down from the $1.5 trillion the company had targeted, with one saying it could end up closer to $1 trillion, and another raised the possibility of a postponement. Anthropic did not immediately respond to a request for comment from AFP.

US stock futures were lower again in late Thursday trading, Axios reported, pointing to further losses when Wall Street reopens on Friday.