Asian stock markets rebounded on Friday, October 16, as dip buyers stepped in to rescue battered technology shares after one of the year's ugliest chip-stock selloffs. The MSCI Asia Pacific Index climbed 0.6%, led by a 1.80% rally in South Korea's Kospi, while Japan's Nikkei 225 added 1.38% and the Topix rose 1.75%, following a steadier Wall Street session where the S&P 500 closed 0.3% higher.
Thursday's rout: Nikkei's 4.9% plunge and a Kospi circuit breaker
Japan's Nikkei 225 fell 3,318 points, or 4.9%, on Thursday to 64,425 — its sixth straight losing day and sharpest single-day drop in about five months, led by semiconductor names like Advantest, which sank 15%.
South Korea took the heaviest blow. The Kospi plunged 7.6% to 5,554.22, its lowest close since April and seventh consecutive decline. Memory-chip giants SK Hynix and Samsung Electronics — the twin pillars of the index — cratered 11.06% and 9.48% respectively, triggering a circuit breaker that halted trading for 20 minutes, the index's tenth such halt this year. Hong Kong's Hang Seng fell 1%.
Why AI stocks are wobbling: profits, debt and Chinese competition
The selling was not about doubt in AI demand — it was about whether the enormous capex pouring into the buildout will earn an acceptable return. Investors were rattled by slowing growth signals at leading AI labs: Anthropic told investors ahead of its planned IPO that sales grew 45% to $17 billion last quarter, a sharp deceleration from the more-than-doubling it posted in the second quarter.
Credit fears deepened the rout. Nvidia-backed AI cloud operator CoreWeave saw its bond yields hit levels associated with distressed debt, prompting Nvidia CEO Jensen Huang to publicly defend the company's financial health. Chinese memory maker CXMT reported progress on a next-generation DRAM architecture, threatening Samsung and SK Hynix. Hotter-than-expected US inflation added pressure, with futures pricing roughly a one-in-four chance of another Federal Reserve rate increase in October — the Fed having raised borrowing costs last month for the first time since 2023.
Even blockbuster earnings could not stop the bleeding. TSMC posted its sixth straight quarter of record net profit — up 69% year on year to $23.59 billion — and guided fourth-quarter revenue of $52.3 billion to $54.3 billion. Its shares still closed down 2% in Taipei, and its US-listed depositary receipts fell 1.8%.
Friday's rebound and what traders are watching next
The turn came as Wall Street dip buyers absorbed Thursday's losses. The equal-weighted S&P 500 jumped 1.4% as money rotated into healthcare and consumer staples, while haven demand pushed the benchmark US 10-year Treasury yield down 13 basis points to 5.06%, easing valuation pressure on growth stocks. In Seoul, Samsung and SK Hynix each climbed more than 2% — though analysts caution the bounce may reflect positioning rather than a fundamental all-clear.
Caution persists: Nasdaq 100 futures slipped 0.5% in early Asian trading, the yen softened to 158.17 per dollar, and Brent crude traded near $105.7 a barrel. Traders now await remarks from Federal Reserve Chairman Kevin Warsh, speaking Friday in Bangkok alongside IMF Managing Director Kristalina Georgieva, for clues on the rate path. Indonesia is also in focus after MSCI launched a consultation on stripping the country of emerging-market status over market-dysfunction concerns.
Takeaway: The AI trade is facing its most serious repricing in months — not because demand is collapsing, but because investors are doing the math on massive capex, rising debt costs and new Chinese competition. Friday's bounce shows dip buyers are still alive, but with the Kospi at a six-month low, the market's one-way bet on AI is over. The test now is whether the rebound broadens beyond the chip names that caused the panic.
Watch: Bloomberg Daybreak: Asia Edition — Asia stocks rise as the chip selloff eases, with analysis of the Kospi rebound and the AI trade (Bloomberg Podcasts).
Music in this post's reel: Kevin MacLeod - Lightless Dawn (incompetech.com), licensed under CC BY 3.0
Sources: CNBC TV18 · Reuters · CNN · The Edge Malaysia (Bloomberg)