Asian stock markets extended their losses for a second consecutive session as investors continued to sell chip stocks amid growing concerns over whether heavy investments in artificial intelligence (AI) will generate strong enough returns.
South Korea led the regional decline, with its benchmark equity index falling 9 percent after plunging 11 percent in the previous session, putting the market on course for its steepest two-day decline on record.
Shares of semiconductor giant SK Hynix Inc. dropped by as much as 20 percent, despite the company reporting a 557 percent increase in quarterly profit. Investors, however, were disappointed as the earnings fell short of market expectations.
Rival Samsung Electronics Co., which is scheduled to release its earnings on Thursday, also came under pressure, with its shares declining by as much as 14 percent.
Market analysts said the sharp decline reflected investors’ growing skepticism about the sustainability of the technology sector’s recent rally.
“Given the weight of SK Hynix and Samsung on the Kospi, there’s nowhere to hide when they fall together,” said Josh Gilbert, Lead Analyst for Asia Pacific and the Middle East at eToro Ltd.
The sell-off in South Korea weighed heavily on the broader regional market, pushing the MSCI Asia Pacific Index down 1.5 percent to its lowest level since mid-April.
Technology stocks also remained under pressure in the United States, with Nasdaq 100 Index futures falling 0.7 percent. The tech-heavy index has now recorded five consecutive days of losses, marking its longest losing streak this year.
European markets were also expected to open lower as investor sentiment weakened amid concerns over technology valuations and global market uncertainty.
Meanwhile, oil prices edged higher after renewed fighting erupted in the Middle East, raising concerns over potential supply disruptions and adding another layer of uncertainty to global financial markets.
