Trading on South Korea's Kospi index was halted for the third time this week, as an 8% fall triggered a circuit breaker intended to curb panic selling. The index closed 5.8% lower on Friday, capping a volatile week that saw five such trading halts this year.
The sell-off was led by technology firms, with investors fretting that recent share price jumps have gone too far. The rout followed a sharp drop in Apple shares on Thursday, when the company announced it would raise prices on its iPads and MacBooks due to soaring computer chip costs. Apple fell 6% – its biggest one-day decline in more than a year.
“Trading halted on South Korea's Kospi for third time this week as tech stocks plunge on AI spending worries.”
Microsoft shares also slid after it announced higher prices for its Xbox gaming consoles, citing rising component costs. The moves have raised concerns that higher component prices could hit device sales, in turn slowing demand for computer chips.
Some investors are also worried about the hundreds of billions of dollars being spent this year by big tech firms to build artificial intelligence infrastructure. “The long term investment case for AI remains compelling, but investors are becoming far more selective about which companies can justify the valuations the market has assigned to them,” said David Makaryan, senior partner at the Alpha Pacific Group, an investment firm.
Elsewhere in Asia, Japan’s Nikkei 225 closed more than 4% lower as shares in technology investment giant SoftBank fell by 12.5%. Other major indexes in Taiwan and mainland China were also sharply lower.
The high cost of commercialising AI tools is gradually being passed on to consumers, said analyst Raymond Woo from Kyoto University Innovation Capital. That “naturally raises questions” about how quickly demand for such tools will match the investment into AI, and whether the valuations of tech stocks today are realistic, Woo said.
The circuit breaker on the Kospi was triggered for 20 minutes on Friday – the third time this week and the fifth such event this year. Share trading in South Korea has been particularly volatile in recent months.