Asia Sheds $1.2 Trillion as AI Trade Cracks From Tokyo to Taipei

Asia woke up to a bloodbath. More than $1.2 trillion in market value vanished from the region's exchanges on Friday, according to BeInCrypto, one day after a US tech selloff wiped out roughly $3 trillion. All four major Asian benchmarks — Japan's Nikkei, South Korea's Kospi, Taiwan's TAIEX and Hong Kong's Hang Seng — now sit in bear market territory, trading between 22% and 48% below their records.

The Friday damage was historic in places. The Nikkei dropped about 6%, its steepest single-day fall since April 2025. Taiwan's TAIEX closed the week down 12.2%, its worst weekly performance since 1991. For comparison, the last Asian crash of this scale came in August 2024, when the Nikkei plunged 12.4% in a session. The selloff was broad: at least 42 countries now have benchmarks in bear market territory, defined as a drop of 20% or more from a recent peak.

The trigger came from Washington and Wall Street. Thursday's US crash hammered chip stocks hardest, and investors grew nervous that strong Democratic midterm gains could usher in tighter AI regulation. Voters rejected data center proposals in 39 of 40 completed ballot measures, a signal that the power-hungry buildout faces real political resistance. Vijay Valecha of Century Financial told The National that AI scrutiny is the theme to watch, and he expects more congressional hearings over who foots the bill for the infrastructure.

Analysts can't agree on what happens next. Dong Baozhen of Lingtong Shengtai told Reuters that AI share prices rested on “rosy illusions about the future,” while Theodore Shou of Yiyi Capital told CNN there “has been too much of a hype earlier this year.” Fibonacci Asset Management's Jung In Yun is still betting chip demand keeps growing.

There's a geographic wrinkle, too. Goldman Sachs estimates Texas holds about 25% of planned data center capacity, leaving a chunk of the AI buildout exposed to one state's politics. And the pressure on Asia predates this week: the Institute of International Finance logged $33.8 billion in emerging market portfolio outflows in October, with Asian equities taking the biggest hit. Only the 2020 COVID shock and March's Iran war shock produced larger outflows, according to the IIF.

Governments are scrambling to contain the bleeding. South Korea eased margin rules to slow forced selling, and Chinese state entities stepped in to buy stocks. Whether that's enough depends on whether this is an AI bubble finally popping — or just a bruising correction in a trade that still has believers.