Asian stock markets fell sharply on Friday due to selling in technology companies as investors worried that a recent surge in share prices had gone too far.
Trading on South Korea’s Kospi was temporarily halted as a mechanism to curb panic selling was triggered after the benchmark index fell 8%. The index closed 5.8% lower.
It comes as Apple’s shares fell sharply on Thursday after it announced it would raise the prices of its iPads and MacBooks due to the rising cost of computer chips.
Some investors are also concerned about the hundreds of billions of dollars that big tech companies are spending this year on building artificial intelligence (AI) infrastructure.
David Makarian, senior partner at investment firm Alpha Pacific Group, said traders were reassessing the valuations of tech stocks, while some were taking profits after a rally in recent months.
“The long-term investment case for AI remains attractive, but investors are becoming more selective about which companies can justify the valuations given to them by the market,” Makarian said.
Elsewhere in Asia, Japan’s Nikkei 225 closed more than 4% lower as shares in technology investment giant SoftBank fell 12.5%.
Other major indexes in the region, including Taiwan and mainland China, were also down sharply.
Stock trading in South Korea has been particularly volatile in recent months.
The 20-minute pause on the Kospi on Friday marked the third time this week the so-called circuit breaker has been triggered and the fifth such incident this year.
Apple shares fell 6% in the US on Thursday – its biggest one-day drop in more than a year.
Shares of Microsoft also fell after it announced higher prices for its Xbox gaming console, citing the higher cost of components.
The move raises concerns that rising component prices could hurt device sales, resulting in slowing demand for computer chips.
The high costs of commercializing AI tools are gradually being passed on to consumers, said Raymond Wu, analyst at Kyoto University Innovation Capital.
Wu said this “naturally raises questions” about how quickly demand for such devices will match investment in AI, and whether the valuations of tech stocks today are realistic.
