An accelerating sell-off of AI-linked shares has impacted global markets, fuelled by fears of rising inflation and future interest rate increases. Traders are reportedly wary of the heavily indebted AI sector.
South Korea's benchmark Kospi 200 index, which includes many memory chip companies, fell more than 8% overnight, reaching a six-month closing low. This triggered circuit breakers that temporarily halted trading. Semiconductor stocks like SK Hynix and Samsung Electronics saw plunges of nearly 11% and 9.5% respectively.
Japan's Nikkei 225 dropped by 4.9% on Thursday, following an 11% slump in memory chip maker Kioxia and a 10% fall in SoftBank. This comes after a slide on Wall Street, where the Nasdaq Composite fell by 1.9% and the S&P 500 dropped 1.1%.
The sell-off follows US data showing inflation jumped to a higher-than-expected 3.7% in September. This figure has led investors to anticipate fresh interest rate increases from the US Federal Reserve. Deutsche Bank analysts noted that the rise in prices was broad-based, not solely driven by fuel costs.
The International Monetary Fund had previously warned this week that a potential AI share price crash could risk global financial stability. While Asian markets are considered most exposed, the UK and eurozone may be more insulated, though investors with US holdings could be affected.