Asian share markets plunged on Friday as global financial markets maintained pressure following a sustained sell-off in technology stocks. Investors have grown increasingly cautious amid concerns around the pace of capital spending on artificial intelligence and questions about returns on these investments. The downward trend in equities was felt across major regional indices as market sentiment continued to deteriorate.
Tokyo’s Nikkei index struggled to hold gains from earlier sessions, while markets in South Korea, Hong Kong and mainland China ended noticeably lower. Traders pointed to continued weakness in Wall Street as a major factor driving the regional retreat. The backdrop of rising risk aversion was compounded by persistent worries about stretched valuations in major technology companies heavily exposed to AI-related growth narratives.
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Global Technology Sell-Off Spurs Regional Losses
The sell-off that began in US markets earlier this week has now rippled through global equities, leaving Asian markets particularly vulnerable due to their high weighting in technology and semiconductor stocks. Major US indices experienced declines as investors rotated out of tech names and sought safer assets. This sentiment was mirrored in Asia, where benchmark indices saw substantial losses.
South Korea’s KOSPI index recorded one of the steepest drops, weighed down by sharp declines in chipmakers and electronics firms. These sectors have been among the biggest beneficiaries of optimism surrounding artificial intelligence, but escalating fears over valuation and future profit margins have led to hefty sell-offs.
Elsewhere, the Hang Seng in Hong Kong and key gauges in Shanghai and Shenzhen slipped as investors reassessed risk exposure. In Japan, markets also felt the pressure of global selling despite some local resilience earlier in the trading session.
Investors Question AI Capital Outlays and Future Returns
A key source of anxiety for market participants is the scale of planned capital expenditure on AI technologies by major global firms. Reports of record levels of spending have raised questions about when these outlays will translate into meaningful revenue and profit growth. Many investors are reassessing their positions in companies that have been flagship players in AI development.
The technology shift that saw AI-related equities fuel growth and optimism in recent years is now under scrutiny. Market analysts suggest that uncertainty about the economic benefits of AI adoption, combined with broader macroeconomic pressures such as inflation and tighter monetary policy, has intensified risk aversion.
This reassessment has also affected related markets, including commodities and cryptocurrencies. Assets that flourished alongside the earlier surge in risk appetite experienced renewed pressure, reflecting the depth of current investor caution.
Outlook for Asian Markets Remains Murky
Looking ahead, analysts say markets will continue to be shaped by developments in global technology sectors and broader economic data. With corporate earnings season underway, investors are watching closely for signs of sustained slowdown or any indication that spending on new technologies could be more disciplined.
There is also heightened sensitivity to shifts in monetary policy globally. Investors will pay particular attention to interest rate decisions and economic indicators in major economies, as these factors have proven to influence capital flows and risk sentiment.
While some market watchers hope for stabilisation in the near term, many emphasise that a return to calmer conditions will depend on clearer signals on both growth prospects and the pace at which innovation spending will translate into profit. As price movements remain volatile, a cautious approach is likely to persist among global and regional market participants.
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