Massive declines in Asian stocks amid fears of an artificial intelligence “bubble” and the Chinese market crisis
Asian stock markets fell on Thursday, under the weight of renewed concerns about the feasibility of huge investments directed at artificial intelligence and their ability to achieve lucrative financial returns. This decline was affected by mixed financial results for major American technology companies, which increased selling pressure on shares of electronic chip companies and Chinese stock exchanges.
In the movement of Asian indices, the MSCI Asia Pacific Stock Index fell by about 1%. The South Korean Kospi index suffered losses of 2.1%, while the Japanese Nikkei 225 index fell by 1.1%. In Hong Kong, the Hang Seng Index fell by 2.7%, and the Chinese CSI 300 Index fell by 1.6%, coinciding with a decline in the Shanghai Composite Index by 1.2%.
Shares of electronic chip companies led the decline in the region. South Korean “SK Hynix” shares fell by about 4%, and its sister company “Samsung Electronics” shares fell by 3.6%. Japanese and Taiwanese stocks also recorded notable declines, as “Kioxia” stock fell by 3.3%, and “Murata Manufacturing” stock fell by 2.1%, while “Taiwan Semiconductor Manufacturing” (TSMC) stock fell by 0.6%, and “Foxconn” stock lost about 1%.
This selling wave comes amid growing doubts about the ability of massive spending on data centers and artificial intelligence computing capabilities to generate profits commensurate with the volume of investment, in light of rising financing costs and stock valuations, and growing fears of the formation of an investment bubble in this vital sector.
As for the American markets, despite the rise in stocks during the previous session, futures contracts for the “Nasdaq 100” index recorded a decline of 1.2% during Asian trading, and futures contracts for the “S&P 500” index fell by 0.6%. This came after “Tesla” shares fell by 3.3% in post-close trading after lowering capital spending expectations, while “Meta Platforms” shares rose by 2.2% after raising expectations for spending on artificial intelligence. The sector was also affected by a decline in the shares of the semiconductor equipment company “Lam Research” by 7.4% as a result of providing profit expectations that fell below market estimates.
Chinese stocks are approaching a bear market
In China, the negative pressures extended to include local stocks, amid declining hopes for the approval of a wide-ranging economic stimulus package, weak corporate results, and continued concern about the future of artificial intelligence investments globally.
With the CSI 300 index falling by 1.6%, its losses amounted to about 20% since its peak recorded in June, making it very close to entering the “bear market” phase according to the generally accepted technical definition.
In the same context, Alibaba topped the losses in the Chinese e-commerce sector, with its stock declining by 5.5%, amid government calls to strengthen quality control. Shares of “JD.com” also fell by 4.2%, “Meituan” by 3.9%, and “Tencent” by 3%.
In terms of commodity markets, Brent crude prices rose by 1.5% to exceed the $110 per barrel barrier, driven by escalating concerns about energy supplies following bloody attacks in Saudi Arabia, and the continued security risks threatening maritime shipping traffic in the Strait of Hormuz.
