Trading on South Korea’s Kospi index was halted for the third time this week as a 8% fall triggered a circuit breaker designed to prevent panic selling, before the index closed 5.8% lower on Friday. The rout, which swept across Asian markets, was led by technology shares after Apple announced it would raise prices on its iPads and MacBooks because of the soaring cost of computer chips.
Apple shares had already dropped 6% on Thursday in New York – their biggest one-day fall in more than a year – and the shockwaves reverberated through Asia. Japan’s Nikkei 225 closed more than 4% lower, with technology investment giant SoftBank tumbling 12.5%. Other major indexes in Taiwan and mainland China also fell sharply.
“South Korea's Kospi halted for third time this week as tech shares plummet after Apple blames chip costs”
The sell-off marks a reassessment of tech valuations after months of rallying, fuelled by excitement around artificial intelligence. “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 investment firm Alpha Pacific Group.
Concerns are mounting that rising component costs could slow demand for devices and, in turn, for the computer chips that power them. Microsoft also announced higher prices for its Xbox gaming consoles, citing higher component costs.
Friday’s 20-minute halt on the Kospi was the fifth time this year that the so-called circuit breaker has been triggered, underlining the volatility that has gripped South Korean stocks in recent months.
The high cost of commercialising AI tools is gradually being passed on to consumers, said Raymond Woo, analyst at 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.