Asian equity markets opened mostly lower on Thursday as renewed selling in semiconductor and artificial intelligence stocks spread from Wall Street, triggering particularly sharp declines in South Korea and Japan. Hong Kong was the main exception, advancing despite the broader regional caution.
South Korea enters bear market
South Korea’s Kospi suffered the heaviest losses, falling around 6.4 per cent during early trading and entering bear-market territory, generally defined as a decline of at least 20 per cent from a recent peak.
The Korea Exchange briefly suspended programme trading in major Kospi constituents as the sell-off intensified. Semiconductor companies led the retreat, with SK Hynix dropping approximately 11 per cent and Samsung Electronics losing more than 8 per cent.
The falls followed weakness among American chip and hardware companies overnight. Investors have become increasingly concerned that valuations linked to artificial intelligence infrastructure may have risen more rapidly than the underlying earnings outlook can support.
South Korea’s central bank also raised interest rates for the first time since 2023, adding further pressure to a market already facing concerns over technology valuations, energy costs and slowing global demand.
Tokyo follows technology shares lower
Japan’s Nikkei 225 declined around 2.8 per cent, with technology, electronics and semiconductor-related companies among the leading losers. The retreat came despite recent optimism surrounding Japanese corporate earnings and continuing efforts to improve shareholder returns.
Currency developments added another layer of uncertainty. Japanese authorities indicated that they were prepared to respond to excessive weakness in the yen, increasing speculation about possible intervention in the foreign exchange market.
A weaker yen ordinarily supports Japanese exporters by increasing the domestic value of overseas earnings. However, it also raises import costs, particularly for energy and raw materials, complicating the outlook for inflation and monetary policy.
Hong Kong breaks with regional trend
Hong Kong’s Hang Seng Index moved against the broader direction, rising around 1.8 per cent. Select Chinese technology and financial shares attracted buyers, helping the market resist the weakness seen elsewhere in Asia.
Mainland Chinese markets were less resilient. The Shanghai Composite slipped approximately 0.6 per cent as investors continued to assess the strength of domestic demand, the property sector and the prospects for additional government support.
Taiwan’s Taiex edged down around 0.1 per cent, while Australia’s S&P/ASX 200 lost approximately 0.3 per cent. Singapore and other Southeast Asian markets traded cautiously as investors monitored technology shares, currencies and energy prices.
Oil and geopolitics remain in focus
Crude prices moved higher as tensions involving the United States and Iran maintained concerns about energy supplies and shipping through the Strait of Hormuz. Brent crude traded above $85 per barrel, while West Texas Intermediate remained close to $80.
Higher oil prices present a particular challenge for energy-importing Asian economies, including Japan and South Korea. Sustained increases could lift inflation, weaken consumer demand and reduce the ability of central banks to support economic growth.
Thursday’s opening showed that regional investors remain highly sensitive to changes in the AI investment narrative. The sharp reversal in South Korea also demonstrated how concentrated exposure to a small number of semiconductor companies can amplify broader market movements.
Newshub Editorial in Asia – 16 July 2026
Ask NF GPT
If you have an account with ChatGPT you get deeper explanations,
background and context related to what you are reading.