Asian Markets Decline As Kospi, Nikkei and Taiwan Benchmarks Fall On Fears Of Tighter US AI Industry Regulations

South Korea’s Kospi index fell as much as 3.7% on 4 November 2026, reversing an early rally as investors sold semiconductor stocks amid concerns over the US midterm elections. Shares of Samsung Electronics and SK Hynix dropped more than 4%, weighing heavily on the benchmark.

The sell-off followed concerns that a strong performance by Democrats could bring tighter scrutiny of the artificial intelligence (AI) industry and affect investments in US data centres.

Why Did The Kospi Index Fall?

The Kospi opened at 5,786.13, up 2.43% from the previous session, supported by gains in US semiconductor stocks. It briefly crossed the 5,800 mark before reversing course.

By 10:33 AM local time (7:00 AM IST), the index had fallen 1.64% to 5,553.67. Samsung Electronics and SK Hynix shares also gave up their early gains, falling 1.59% and 2%, respectively.

Foreign investors were behind much of the selling pressure. They offloaded Korean stocks worth 549 billion won, while retail investors and domestic institutions were net buyers.

How Did Other Asian Markets Perform?

The weakness was not limited to South Korea. Japan’s Nikkei 225 fell 3.6%, while Taiwan’s benchmark index, TAIEX, declined around 2.5%.

The concerns stem from the possibility that tighter US oversight of AI companies could slow data-centre expansion. This could affect future demand for semiconductors and other hardware supplied by companies across Asia.

The previous session had offered some support, with US chip stocks closing higher. Nvidia gained 2.29%, Micron rose 2.58% and AMD advanced 3.65%.

Analysts say the direction of the Korean market would depend partly on US midterm election results, Treasury yields, and Nasdaq 100 futures.

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