Asian markets fell on Thursday, led by a sharp decline in semiconductor stocks after a major interest rate hike by the Bank of Korea. The Kospi index dropped 6.6% as tech giants faced heavy selling pressure. Meanwhile, regional oil prices remained volatile amid rising geopolitical tensions in the Middle East.
Equity markets across Asia faced significant downward pressure on Thursday as investors pulled back from artificial intelligence and semiconductor-related shares. The decline was particularly severe in South Korea, where the Kospi index retreated 6.6% to finish at 6,816.70. This market correction followed a surprise decision by the Bank of Korea to raise interest rates, marking its first such move since 2023 in an effort to manage inflation concerns linked to regional geopolitical instability.
Tech Sector Faces Heavy Selling
The sell-off heavily impacted major semiconductor companies, which have been at the center of the recent AI-driven market rally. South Korean memory chip manufacturer SK Hynix saw its share price fall by 11.2%, while Samsung Electronics recorded an 8.2% decline. These losses reflect growing investor caution regarding valuations in the chip sector, especially as higher borrowing costs can compress future earnings for capital-intensive technology firms.
In Japan, the Nikkei 225 index dropped 2.9% to close at 66,767.64. The selling was widespread across the Japanese tech landscape, with memory chipmaker Kioxia falling 13.5%. Leading equipment manufacturers Tokyo Electron and Advantest also saw their shares decline by 5.2% and 5.6%, respectively, while SoftBank Group shares fell 6.4%.
Geopolitical Impact on Energy and Trade
While equity markets dealt with a sector-specific correction, energy markets remained sensitive to the worsening situation between the US and Iran. Although oil prices saw a slight easing—with Brent crude down 0.4% to $84.55 a barrel—analysts continue to monitor the Strait of Hormuz. Disruptions in this key shipping lane remain a primary risk for global energy supply chains and tanker traffic in the Persian Gulf.
Divergent Trends and Regional Performance
Despite the broader regional weakness, some markets showed resilience. Hong Kong’s Hang Seng index gained 1.7% to 25,111.22, supported by a 4.4% rise in Alibaba. This movement followed regulatory approval for Apple Intelligence to integrate Alibaba's Qwen model in China. Elsewhere, the Shanghai Composite fell 0.9%, and Australia's S&P/ASX 200 edged lower by 0.2%. India's Sensex remained a positive outlier, posting a marginal gain of 0.3%.
Investors are now shifting their attention to upcoming corporate earnings, particularly from Taiwan Semiconductor Manufacturing Company (TSMC). The market will look for concrete data on demand for AI components, which serves as a bellwether for the health of the global technology sector. The next important monitorable for investors will be whether these companies can maintain their profit margins amidst slowing global demand and the increased cost of capital.