Kospi, Nikkei plunge as Seoul eases margin loan rules

Asian markets tumbled on Friday, November 6, as the selloff in artificial intelligence stocks spread from Wall Street. South Korea's Kospi and Japan's Nikkei 225 both closed down 6%, and Taiwan's Taiex ended 4.5% lower, CNN reported. Investors fear that the Democrats' sweep of the US midterm elections will bring tighter rules on data centers and slow the AI spending boom that powered the region's rally this year.cnn.com+1

Halts and heavy chip losses

The Kospi fell as much as 8.8% early in the session, which set off a circuit breaker, before it recovered some ground. The index fell below 5,000 for the first time in about nine months and stopped trading for 20 minutes. The Nikkei slid into bear-market territory. Taiwan's market had its worst week since September 2001.nbcnews.com+2

Chipmakers took the biggest losses. Samsung Electronics dropped as much as 11%, SK Hynix ↗ 3.01% lost nearly 14%, and TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 6.73% fell as much as 10%. In Tokyo, SoftBank Group fell 15% and Advantest about 16%. The asset sold off a day after the Nasdaq Composite sank 5.5% and the Philadelphia Semiconductor Index PHLX Semiconductor Sector Index ↗ 4.39% dropped 12.2%.cnbc.com+1

Seoul moves to stem forced selling

South Korea's government will suspend the 140% collateral requirement on brokerage margin loans for three months starting November 9. Finance Minister Lee Hyoung-il said the step aims to prevent "excessive forced selling". Officials said they have more measures ready if volatility gets worse. Japanese Prime Minister Sanae Takaichi said she was "aware share prices, particularly those of AI and chip sectors, are falling sharply".koreajoongangdaily.com+2

Politics meets a fragile trade

Democrats won both chambers of Congress. Texas Governor-elect Gina Hinojosa has called for an immediate moratorium on new data centers. Markets "are being punished according to their dependence on the U.S. AI infrastructure cycle," Saxo strategist Charu Chanana told NBC News. She also warned that forced liquidations can make "the selling self-reinforcing".straitstimes.com+2

Some analysts think the drop may be close to running its course. "We are likely in the final stage of capitulation," said Allen Huang of Mega Financial Holding. By mid-morning in Europe, Nasdaq futures pointed to a rebound. Pepperstone's Dilin Wu was less sure. "The broader unwind in global AI positioning may not be over yet," Wu said.businessinsider.com+2