Asian stock markets lost more than $1.2 trillion in value on Friday. The rout followed a brutal US tech selloff that erased roughly $3 trillion.
Investors now wonder whether the AI boom is losing steam or simply undergoing a painful correction.
Are All Four Major Asian Markets Now Stuck in a Bear Market?
A bear market occurs when an index falls at least 20% from its recent peak. It usually signals deep investor pessimism.
Now, all four major Asian benchmarks sit in that zone. The Nikkei, Kospi, TAIEX, and Hang Seng trade between 22% and 48% below their records.
On Friday alone, the Nikkei fell about 6%, its deepest drop since April 2025. Moreover, Taiwan’s 12.2% weekly decline was its biggest since 1991. Before that, the last comparable Asian crash came in August 2024, when the Nikkei plunged 12.4%.
Analysts disagree on what comes next. Dong Baozhen of Lingtong Shengtai told Reuters that AI stock prices rested on “rosy illusions about the future.”
Similarly, Theodore Shou of Yiyi Capital told CNN that “there has been too much of a hype earlier this year.” However, Fibonacci Asset Management’s Jung In Yun still expects chip demand to grow.
Is the AI Bubble Finally Starting to Burst?
The trigger came from Wall Street, where Thursday’s crash erased about $3 trillion in market value. Chip stocks suffered the worst damage.
Investors feared that the Democrats’ strong midterm gains could bring tighter AI rules. In fact, voters rejected data center proposals in 39 of 40 completed ballot measures.
“The theme we are watching most closely is AI scrutiny,” said Vijay Valecha of Century Financial to The National. He expects more congressional hearings on who will pay for the power-hungry buildout.
Meanwhile, Goldman Sachs estimates that Texas hosts about 25% of planned data center capacity. That concentration leaves AI projects exposed to local political shifts.
The pressure on Asia also predates this week. The Institute of International Finance (IIF) reported $33.8 billion in emerging market portfolio outflows in October.
According to the IIF, only the 2020 COVID shock and March’s Iran war shock produced larger outflows. Asian equities took the biggest hit.
Governments now try to limit the damage. South Korea eased margin rules to curb forced selling, while Chinese state entities bought stocks.
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