Asian tech stocks retreat as AI trade unwinds, oil jumps

Asian tech stocks retreat sharply on Monday as the artificial intelligence trade that had driven record gains in technology shares reversed, with South Korea’s Kospi sliding up to 9% and Japan’s Nikkei 225 dropping nearly 4% in early trade. The selloff, triggered by profit taking in richly valued chip and AI names and compounded by a spike in crude prices after renewed Iran Israel strikes, exposed how dependent regional benchmarks have become on a narrow group of technology stocks.

Market overview

Market/Index	[Mon] Move & % Change	Comments
Kospi (South Korea)	Crash up to approx. -9% intraday, trading later around -5%	Circuit breaker halt for 20 minutes after AI chip rout; index about 14% below last week’s record.
Nikkei 225 (Japan)	Down up to approx. -3.9% intraday	Biggest fall in about three months, led by tech and AI stocks.
Other Asia (Hang Seng, Shanghai Composite)	Down (exact percentages not specified)	Followed regional tech weakness and Wall Street’s Friday tech selloff.

• Asia Pacific equities opened lower, led by South Korea and Japan.
• Circuit breaker on Kospi triggered for the third time this year.
• US tech indices had dropped sharply on Friday, setting up weak sentiment.

Tech and AI-led selloff

Market/Stock	Movement	Context
Samsung Electronics	Fell over 6%	Heavy profit booking after AI-driven rally; key Kospi heavyweight.
SK Hynix	Dropped over 4%	High-bandwidth memory chip leader hit by AI valuation concerns.
SoftBank Group	Declined more than 10% intraday	Pulled back after strong AI-related gains this year.
Kioxia Holdings	Fell over 10% intraday	Memory chipmaker had surged more than 600% year to date.

• AI-linked semiconductor stocks bore the brunt of selling across Asia.
• Investors locked in profits after a “red hot” AI rally in Korean and Japanese tech.
• Samsung and SK Hynix together account for nearly half of Kospi’s weighting.
• The two Korean chipmakers contributed roughly two-thirds of Kospi’s gains this year.
• Even after the drop, Samsung is up about 138% and SK Hynix about 196% year to date.
• Japanese tech and AI names, including electric appliances and machinery, dragged the broader Topix lower.
• The Nasdaq 100 and Philadelphia Semiconductor Index had slumped on Friday, reinforcing the rotation out of high-growth tech.

Concentration risk and valuation worries

• Kospi remains up about 79% in 2026 despite the latest fall.
• The index’s performance has been heavily tied to a small group of AI chip stocks.
• The selloff highlighted concentration risk, with broader market gains reliant on a few names.
• Investors are increasingly questioning whether AI demand is translating into “real revenue”.
• “The burden of proof has gone up” for AI-related earnings, said Charu Chanana, chief investment strategist at Saxo.
• Concerns over high valuations in AI and tech had been building before Monday’s reversal.

Macro and geopolitical pressures

Market/Asset	Movement	Notes
Brent crude	Up about 3.7% to around $96.50 a barrel	Jumped after renewed Iran Israel strikes and regional escalation risks.
US crude	Up about 3.5% to around $93.70	Reflects supply concerns from Middle East tensions.

• Iran and Israel exchanged missile and military strikes after an earlier ceasefire.
• Traders are again pricing in risks to global oil supply, including via the Strait of Hormuz.
• Higher oil prices are feeding inflation concerns and fears of tighter financial conditions.
• Stronger-than-expected US jobs data reinforced expectations that the Federal Reserve may keep rates higher for longer.
• Elevated US yields and a firm dollar added pressure to risk assets in Asia.

Policy and political signals

• South Korean President Lee Jae-myung acknowledged expected market volatility.
• He said domestic shares are still “slightly undervalued” despite the sharp swings.
• Overall, Kospi has been among the best-performing global indices this year before Monday.
• The war-linked disruption of oil and gas shipments from the Gulf remains a key macro overhang.

What it means for investors

• Monday’s moves show how AI euphoria can quickly reverse when valuations are stretched.
• Markets with tech-heavy weightings like Kospi and Nikkei are more exposed to such swings.
• Rising crude and sticky inflation expectations complicate the rate-cut narrative that had supported growth stocks.
• Investors may demand clearer earnings visibility from AI and semiconductor plays before re-rating higher.

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