Chinese Tech Stocks Crumble as US Selloff Hits Asia, Japan Enters Bear Market

The worst Wall Street selloff in 19 months sent Chinese and other Asian stock markets plunging into the red today, led by technology shares. Chinese markets fell but weathered the storm better than regional markets.

The benchmark Shanghai Composite Index tumbled 1.1 percent, with its Nasdaq-style STAR Market losing 2.6 percent. The Shenzhen Component Index tanked 2.6 percent, with the tech-heavy ChiNext Index retreating 4 percent.

Hong Kong's Hang Seng Index shed 1.3 percent, with its tech sub-index down 1.8 percent. Taiwan's Taiex index slumped 4.5 percent, amid reports that the Ministry of Finance called senior executives at state-owned banks in the morning and instructed them to support the market.

Chinese companies have been announcing buyback after buyback to stanch hemorrhaging share prices, bolstered by government measures to support repurchases.

"The shock's relatively smaller impact on the Chinese markets today was partly a result of prompt and active measures taken by major companies," said Yang Chao, an analyst with Galaxy Securities. "They not only demonstrate strong will, but are executed with determination as well."

Elsewhere in Asia, losses were heavier. Japan's Nikkei index slid 6 percent into bear territory, its worst one-day performance since April 2025. South Korea's Kospi lost 6 percent, with trading suspended for 20 minutes in the morning when circuit-breakers were triggered.

"It's actually a bit of a disaster," Christopher Forbes, head of Asia and Middle East at CMC Markets, told Reuters.

The selloff in Asia followed carnage on Wall Street a day earlier, as investors turned sour on the outcome of the US midterm elections after initially greeting it with a one-day rally. Sentiment focused on concerns that Democrats, who seized control of Congress and many state governments, will seek to restrict AI data center construction and slap regulations on AI development.

Tesla and SpaceX shares got hammered as investors punished Elon Musk for pouring US$446 million into the campaigns of Republican candidates soundly defeated. Potential investors in Anthropic's highly anticipated IPO in New York – expected to be the biggest in history – were reportedly getting cold feet about a mid-November start date, suggesting the public offering may be delayed until markets stabilize.

"It's pretty clear there's been a real shift in sentiment," Michael McCarthy, chief executive for Australia and New Zealand at online brokerage Moomoo, told Reuters. "Market turning points are often accompanied by strong swings in either direction. That's what we appear to have had, and it suggests that is the direction that we're now headed in."

Across Asia, shares in chipmakers and data-center equipment suppliers in South Korea and Japan were hardest hit, adding to declines earlier in the week. In South Korea, which hosts the world's two biggest memory chipmakers, Samsung Electronics shares dived 6.4 percent, and SK Hynix plunged 10 percent. In Japan, Tokyo Electron plunged 5.6 percent, Kioxia Holdings fell 8.7 percent and technology investment giant Softbank dived nearly 11 percent.

Charu Chanana, chief investment strategist at Saxo, cited an element of panic selling, which she said can become self-reinforcing.

On the Chinese mainland, ChangXin Memory Technologies plunged 5 percent, robotics maker Unitree slipped 4 percent, optical maker Zhongji Innolight dived 9.2 percent, and electric battery maker CATL plunged 3.7 percent.

Among Chinese companies traded in Hong Kong, Semiconductor Manufacturing International Corp dropped 4.3 percent, computer maker Lenovo tumbled 4 percent, Alibaba lost 3.9 percent, and Tencent was down 2.5 percent. In a bright spot, Hua Hong Grace Semiconductor rose 4.3 percent after reporting that third-quarter profit more than doubled.

"The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone," Dong Baozhen, chairman of asset manager at Lingtong Shengtai, told Reuters. "The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped."