AI stocks were hammered across Asia after Donald Trump’s Republicans suffered a historic defeat in the US midterm elections. Broader markets rallied and oil plunged, but chip makers and AI-linked names bore the brunt.
Why Did AI Stocks Tumble After the US Midterm Vote?
Fears for planned data centre construction projects drove the drop. Newly installed Democrats on Capitol Hill also renewed their scrutiny of the sector.
The sector was already under pressure over the vast sums going into new facilities, R&D and chip development. Investors also questioned when these companies would turn a profit.
Saxo Markets’ Charu Chanana said the vote was accelerating a reassessment of AI that was already under way. “A Democratic Congress introduces another layer of uncertainty: regulatory scrutiny,” she wrote.
She also said: “This is not the same as an outright anti-AI policy agenda.” AI remains strategically important for US competitiveness, particularly against China.
How Far Did SK hynix, Samsung and Kioxia Fall?
- SK hynix: down more than 7%
- Samsung: down 5.5%
- Kioxia (Tokyo): down more than 13%
- Advantest (Tokyo): down 14.7%
- Tokyo Electron: down more than 9%
- SoftBank: down 6.8%
US Nasdaq futures also fell more than 1%. The chip sell-off spread well beyond Korea and Japan.
Where Did Money Rotate as Chip Stocks Fell?
Investors rotated into finance, auto, mining and manufacturing names. Seoul, the poster child of the AI-led surge in the first half of the year, shed more than 5%.
Taipei lost more than 3% and Tokyo gave up 1.8%. Hong Kong posted healthy gains on hopes for an easing of US-China trade tensions.
Alibaba, JD.com and Tencent led the Hong Kong rally. Shanghai, Sydney, Singapore, Wellington, Mumbai, Jakarta and Manila also advanced.
What Did the Oil Plunge Mean for Treasury Yields?
Oil dived more than 8% on Wednesday after the US result. Optimism grew that Trump will seek a deal to end the Iran war.
Both main crude contracts are now below US$100 for the first time since the start of October. Vice-president JD Vance said in a social media post that the Republican defeat was due to the unpopularity of the eight-month-old conflict.
Lower crude tempered inflation worries, and Treasury yields dipped again on Thursday. The prospect of gridlock on Capitol Hill, which could mean less spending, also lowered borrowing costs.
The dollar held losses against its peers in Asian trade.
What Does This Mean for Bursa Malaysia Investors?
The report names no Bursa Malaysia-listed company. There are no local share prices in it to test against this sell-off.
Investors may want to watch whether Saxo’s three risks turn into data centre restrictions or cuts to capital spending. The Asian AI and chip names above are the stocks to monitor from this report.
For a framework on screening AI-linked names, read AI Stock Analysis for Malaysians.
Key Takeaways
- AI stocks fell as US midterm results stoked data centre and regulatory concerns.
- SK hynix (down more than 7%) and Kioxia (down more than 13%) led the chip losses.
- Alibaba, JD.com and Tencent led Hong Kong gains on US-China trade hopes.
- Oil dived more than 8% on Wednesday, and both main contracts are below US$100.
This article is for information only and is not financial advice. Do your own research before making any investment decision.
Frequently Asked Questions
Why did AI stocks fall after the US midterm results?
AI stocks fell on fears for planned data centre construction and renewed scrutiny from newly installed Democrats on Capitol Hill. Saxo Markets’ Charu Chanana said the vote was accelerating a reassessment of AI that was already under way.
How much did SK hynix and Samsung fall?
SK hynix was off more than 7% and Samsung was down 5.5% in Asian trade. Kioxia and Advantest fell more than 13% and 14.7% in Tokyo.
Did Bursa Malaysia stocks fall with AI stocks?
The source report names no Bursa Malaysia-listed company, so it does not show how local stocks moved. Hong Kong tech names Alibaba, JD.com and Tencent led regional gains.
Why did oil prices fall after the US midterms?
Oil dived more than 8% on Wednesday as investors priced in hopes that Trump will seek a deal to end the Iran war. Both main crude contracts are now below US$100 for the first time since the start of October.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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