Asian Equities Slide as Doubts over AI Spending Grow

Dow Jones
Jul 28
 
 

Asia stocks fell Tuesday, with South Korean markets leading the losses amid growing concerns over spending linked to the artificial-intelligence boom.

Chip and technology stocks dragged equity markets lower across Asia after the U.S. Philadelphia Semiconductor Index fell 2.2% on Monday, extending a selloff into a third straight session and taking the index's cumulative loss over the period to more than 7%.

"Sentiment toward the semiconductor sector was also hit by a report that a Chinese state-backed company had begun mass-producing deep ultraviolet lithography chip-making equipment, potentially increasing competition with foreign suppliers," Commerzbank Research said, referring to a report by The Information saying a Shanghai-based company started making a homegrown version of chip-manufacturing machines.

South Korea's Kospi led declines across the region, heading for its largest one-day drop since plunging 12% on March 4, according to FactSet. The benchmark index was recently 10.3% lower, with chip-making index heavyweights SK Hynix slumping 13% and Samsung Electronics dropping 12.0%.

The steep losses prompted Korea Exchange to briefly suspend trading twice in each of the main Kospi index and the tech-heavy Kosdaq.

"The KOSPI rolled out of bed with its most bearish opening gap in four months," said Matt Simpson, senior market analyst at StoneX, in an email. "Its 10% decline for the day so far suggests we're in the 'despair' part of the sell-off, where traders are simply trying to rush to the exit before everyone else. And these sell-offs tend to get ugly as there are few buyers," Simpson added.

Japan's Nikkei Stock Average declined 4.0%, with memory-chip manufacturer Kioxia Holdings sliding 18% and semiconductor manufacturing equipment maker Kokusai Electric falling 14%. Singapore's FTSE Straits Times Index shed 0.2%, China's Shanghai Composite Index lost 1.0%, and Hong Kong's Hang Seng Index edged 0.1% lower.

"Investors remain concerned about the scale of AI-related spending and whether the rapid increase in [capital expenditure] would translate into sufficient returns," said Commerzbank analysts.

Meanwhile, crude-oil futures fell, as the pause in the U.S.-Iran conflict continued, with President Trump saying on Monday there was a "good chance that something good could happen" with Iran. The Wall Street Journal reported that Trump paused a major escalation in the military campaign against Iran amid efforts to revive diplomacy to open the Strait of Hormuz.

Front-month West Texas Intermediate crude oil futures fell 1.2% to $81.64 per barrel and front-month Brent crude oil futures dropped 1.2% to $87.29 a barrel, ICE data showed.

 

Write to Ronnie Harui at ronnie.harui@wsj.com

 

(END) Dow Jones Newswires

July 28, 2026 00:50 ET (04:50 GMT)

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