This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- South Korean and Taiwanese markets plummeted over 6-8% at the open, triggered by a massive tech sell-off in the U.S. following midterm election results.
- Taiwan’s National Stabilization Fund is on high alert and may call an extraordinary meeting to implement market-support measures if "disorderly" trading continues.
- China’s STAR and ChiNext AI indices are poised for a sharp 6% drop, extending a correction that has already wiped out nearly $480 billion in market value.
- SoftBank Group (SFTBY) credit default swaps (CDS) surged 22 bps to 466 bps, the highest level since 2022, signaling rising investor anxiety over AI-related debt.
- Geopolitical uncertainty increased as Iran delivered a nuclear proposal to Washington via Qatar, contingent on the U.S. meeting seven specific demands.
Tech Rout Grips Asian Bourses
Equity markets across East Asia faced intense selling pressure on Friday morning as fears over the future of artificial intelligence (AI) infrastructure intensified. The South Korean KOSPI (^KS11) tumbled as much as 8.55% shortly after the open, triggering a 20-minute circuit breaker as investors reacted to U.S. midterm election results. Analysts suggest a Democratic sweep in Congress has stoked fears of tighter regulations on data centers, potentially slowing the build-out of AI infrastructure.
In Taiwan, the benchmark TAIEX (^TWII) slid more than 6%, led by heavy losses in the semiconductor sector. Taiwan Deputy Finance Minister announced that the National Stabilization Fund is monitoring conditions closely and could convene an extraordinary meeting to stabilize the market if confidence collapses. Despite the equity rout, Taiwan's overnight interbank borrowing rate remained steady at 0.805%.
China Injects Liquidity Amid AI Slump
The People's Bank of China (PBOC) moved to support the banking system by injecting 226 billion yuan through overnight reverse repos at a fixed rate of 1.25%. This comes as the tech-heavy STAR 50 and ChiNext indices prepared for a 6% opening drop. The Chinese AI sector has been under significant duress, with recent reports indicating a 40% decline in major tech gauges over the last four months due to overvaluation concerns and export restrictions.
Corporate and Regulatory Developments
SoftBank Group (SFTBY) saw its 5-year credit default swaps widen to 466 bps, reflecting growing skepticism regarding the company's heavily leveraged AI investments and borrowing costs. Meanwhile, MSCI Chairman emphasized that South Korea must fully implement its ongoing regulatory reforms to achieve a Developed Market reclassification, noting that current measures have not yet sufficiently addressed accessibility barriers for global institutional investors.
In the banking sector, the Reserve Bank of New Zealand (RBNZ) filed charges against Westpac New Zealand Limited (WBC) over an alleged disclosure breach related to the Depositor Compensation Scheme (DCS). The RBNZ claims Westpac failed to provide accurate information regarding its Custodian PIE product on its website for over 100 days.
Geopolitical Shifts
On the geopolitical front, Iran has reportedly delivered a new nuclear proposal to Washington through Qatari mediators. A senior Iranian official stated that while the U.S. is reviewing the document, Tehran will only engage in formal discussions once Washington satisfies seven demands. This development adds a layer of complexity to an already volatile global market environment, as energy prices remain sensitive to tensions in the Middle East.
Automated market updates written with AI from market data and news wire reports, published without human review.