AI Valuation Fears Batter Asian Stocks, Prompt Taiwan Regulator to Reassure Markets
Enthusiasm over artificial intelligence has driven up global technology stock valuations in recent years, but investors are beginning to question whether corporate earnings can justify elevated share prices, prompting a rapid withdrawal of funds. The synchronized declines in Japanese, South Korean and Taiwanese equities show that an AI valuation correction has become a significant risk to Asian markets and investor confidence.
The latest selloff triggered a circuit breaker in South Korea, while Taiwan’s benchmark index swung by more than 1,000 points intraday. Related reports did not provide the exact trading date or percentage declines. Taiwan’s Financial Supervisory Commission said the market’s fundamentals remained unchanged and the overall collateral maintenance ratio for margin trading was still high. It said it would continue monitoring international developments and respond when appropriate.
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The history behind this eventTaiwan Regulator Says Margin Buffers Hold After AI-Led Stock Rout
Investor concern over lofty artificial intelligence valuations and uncertain returns on heavy AI spending triggered a selloff in global chip shares that spread across Asia. Taiwan’s market is especially sensitive because semiconductor and AI supply-chain companies carry substantial index weight. The slide raised fears that margin calls and short-selling could amplify losses, putting leverage indicators and the Financial Supervisory Commission’s assessment of market stability under scrutiny.
On July 28, Taiwan’s benchmark index closed at 41,603.36, down 2,030.83 points, or 4.65%, its third-largest point decline on record, on turnover of about NT$809.482 billion. South Korea fell 10.64% and Japan lost 4.20%. The Financial Supervisory Commission said the aggregate maintenance ratio for margin accounts stood at 175.12% on July 27, above brokers’ 130% margin-call threshold, while borrowed-share selling accounted for 3.80% of market turnover, a fluctuation it described as normal.
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