AI Anxiety Triggers Chip Stock Sell-Off, Asian Tech Stocks Plunge, Emerging Markets Index Hits 3-Month Low

Asian technology stocks plunged on Tuesday (28th), driving the benchmark emerging markets index to its lowest level in three months. However, falling oil prices helped shield European equities and currencies from the broader sell-off.

By 9:52 a.m. London time, the MSCI Emerging Markets Index had dropped 3.6%, marking its largest single-day decline since late June and reaching its lowest point since April.

South Korea bore the brunt of the turmoil. The benchmark KOSPI index closed down 10.8% on Tuesday, briefly halting trading for 20 minutes after hitting an 8% decline that triggered a circuit breaker. Tech giants Samsung Electronics and SK Hynix both tumbled over 13%. Japan was not spared, with the tech-heavy Nikkei 225 index closing nearly 4% lower. Taiwan's key emerging market stocks also declined, as Asian markets as a whole entered a technical correction phase.

"Markets are currently caught between two opposing forces: a fresh wave of selling in semiconductor manufacturer stocks and news that U.S.-Iran talks, though paused over the weekend, will continue," Deutsche Bank analysts Jim Reid and his team wrote in a report.

In Asian foreign exchange markets, the Indian rupee strengthened due to central bank intervention, while the Indonesian rupiah extended losses amid policy uncertainty following the unexpected resignation of the central bank governor.

In the U.S., AI chip leader Nvidia (NVDA-US) fell 5% on Monday in New York, relinquishing its position as the world's most valuable publicly traded company to Apple (AAPL-US). Despite reports that Nvidia is negotiating to provide around $250 billion in funding for OpenAI's large-scale data center projects, investors remain concerned about whether massive spending on AI development will translate into returns and about intensifying competition from China.