A sharp selloff swept across major Asian financial markets following the U.S. midterm elections, as investor enthusiasm for the artificial intelligence boom collided with growing political opposition to data centers in the United States.
The downturn hit semiconductor hubs particularly hard, Asia Times reported. South Korea’s benchmark Kospi index dropped more than 8 percent to slip below the 5,000 threshold for the first time since February. Leading memory chip manufacturers Samsung Electronics and SK Hynix each tumbled more than 10 percent during Friday’s trading.
Regional Tech Hubs Suffer Broad Declines
The contagion quickly spread through regional exchanges. In Japan, the Nikkei 225 average sank below 60,000 for the first time since mid-May, weighed down by AI-associated companies including Advantest, SoftBank Group and Kioxia. Both the Nikkei and the broader Topix entered bear market territory, according to Asia Times.
In Taiwan, shares of Taiwan Semiconductor Manufacturing Co. fell as much as 9.8 percent in a single session, marking one of the steepest daily declines for the contract chipmaker since the pandemic. The drop followed heavy losses in New York, where the Philadelphia Semiconductor Index plunged more than 12 percent after Advanced Micro Devices and Micron each lost more than 15 percent and Nvidia declined 9 percent.
Analysts attributed the sudden shift to the outcome of the Nov. 3 U.S. midterms, where Democratic victories across several key states raised expectations of tighter scrutiny over energy-hungry data facilities.
“FOMO is not an investment strategy. We are prudent and we are cautious, especially in credit,” Marc Rowan, chief executive of Apollo Global Management, said regarding the firm’s cautious posture on AI investments, as reported by Asia Times.
Political Headwinds Threaten Infrastructure Plans
Much of the market anxiety centers on state-level leadership changes in regions that have served as prime destinations for tech infrastructure. In Texas, Democratic challenger Gina Hinojosa defeated incumbent Republican Gov. Greg Abbott after campaigning on pledges to place a moratorium on data center agreements until municipal and state protections are passed.
Voters across the U.S. also greenlit or advanced at least 33 local ballot initiatives aimed at banning, pausing or restricting data center construction. Research firm BMI, a unit of Fitch Solutions, reported that roughly 53 percent of hyperscale development pipelines are located in states with newly elected Democratic governors, exposing multi-billion-dollar projects to heightened risk of delays through 2028.
Strategists note that while computing demand remains robust, the potential removal of tax incentives and the introduction of strict power-grid mandates could significantly lift construction costs and squeeze industry margins.
Economic Exposure for Asian Exporters
The market shock poses significant economic stakes for South Korea, which has leaned heavily on advanced semiconductor manufacturing to power economic growth under President Lee Jae Myung. South Korean shipments surged nearly 94 percent year-over-year in October to surpass $115 billion, driven almost entirely by global demand for AI hardware.
Moody’s Analytics economist John Bromhead noted that while semiconductor manufacturing fueled domestic facilities investment, intense reliance on the sector leaves the country vulnerable if global technology capital expenditures slow down, Asia Times reported.
Market participants now await further clarity on whether newly elected state officials will enforce complete moratoria on facilities or pursue conditional permits that mandate independent power generation and ratepayer protections.
