Asian stock markets fell sharply on Friday, led by a sell-off in technology companies, as investors feared recent stock price rises had gone too far.
Trading on South Korea’s Kospi was temporarily halted as the benchmark index’s 8% drop triggered a mechanism to curb panic selling. The index closed down 5.8%.
This comes after Apple shares fell sharply on Thursday after announcing they would do so. increase the prices of its iPads and MacBooks due to the soaring prices of computer chips.
Some investors are also concerned about hundreds of billions of dollars will be spent this year by big tech companies to build artificial intelligence (AI) infrastructure.
Traders are reassessing valuations of technology stocks, while some are taking profits after a rally in recent months, said David Makaryan, senior partner at Alpha Pacific Group, an investment firm.
“The case for long-term investment in AI remains compelling, but investors are becoming much more selective about companies that can justify the valuations the market has assigned them,” Makaryan said.
Elsewhere in Asia, Japan’s Nikkei 225 index closed more than 4% lower, with shares of tech investment giant SoftBank falling 12.5%.
Other major indexes in the region, notably in Taiwan and mainland China, were also down sharply.
Stock trading in South Korea has been particularly volatile in recent months.
Friday’s 20-minute shutdown on the Kospi marked the third tripping of the so-called circuit breaker this week and the fifth such event this year.
In the United States on Thursday, Apple shares fell 6%, their biggest one-day decline in more than a year.
Microsoft shares also fell after it announced higher prices for its Xbox game consoles, citing higher component costs.
The moves have raised concerns that rising component prices could hit device sales, which could slow demand for computer chips.
The high cost of commercializing AI tools is gradually being passed on to consumers, said analyst Raymond Woo of Kyoto Innovation Capital University.
This “naturally raises questions” about how quickly demand for such tools will match investment in AI, and how realistic current valuations for tech stocks are, Woo said.