Asian stock markets experienced a sharp sell-off on July 28, with Japanese and South Korean indexes leading the decline, primarily driven by concerns over increased competition from Chinese chipmakers and skepticism about the profitability of large-scale investments in artificial intelligence. The downturn followed similar losses on Wall Street, as investors worried that established semiconductor companies in Japan and South Korea would face rising costs and margin pressures due to China's rapidly advancing chip sector [1][2].
South Korea's KOSPI index plunged 9.45% to trade near 6,120, marking one of the steepest declines in the region. Major chipmakers such as SK Hynix Inc. fell up to 13%, and Samsung Electronics Co. dropped as much as 10%. The broader MSCI Asia Pacific equity gauge was dragged down by more than 3%. The sharp drop in KOSPI 200 futures triggered the Korea Exchange to activate a five-minute 'sidecar' trading curb, temporarily suspending program sell orders for the 22nd time this year [2].
Japanese markets also suffered significant losses, with the Nikkei 225 falling 4.38% to a two-month low around 62,090, and the Topix index losing 2.3% to stand at 3,973. Key tech and finance names, including Kioxia Holdings, SoftBank Group, Advantest, and major banking stocks, posted notable declines. Technical analysis indicated that key support levels for both the Nikkei and the Kospi were being tested, with traders watching for signs of further downside momentum. Some analysts forecast that breaking below recent lows could lead to additional selling pressure [1][2].
China's SSE Composite also closed lower, falling 0.83% to around 3,830. However, Hong Kong's Hang Seng Index bucked the regional trend, rising 0.58% to around 25,350, supported by robust capital inflows, strong IPO momentum, and sustained investor enthusiasm for local tech and AI shares [2]. Market strategists advised caution amid heightened volatility, recommending close monitoring of trading volumes and technical indicators for signs of reversal or continuation. Sentiment remains fragile as traders weigh the impact of Chinese competition and doubts about AI-driven returns against global demand for semiconductors [1][2].
CONCLUSION
Asian tech stocks suffered a high-impact sell-off, led by South Korea and Japan, as fears over Chinese chip competition and AI profitability weighed heavily on investor sentiment. The market remains volatile, with analysts urging caution and close monitoring of technical signals. While most regional markets declined, Hong Kong's Hang Seng Index managed to rise, highlighting divergent investor responses.