Investors this week rotated out of semiconductor plays into other sectors such as banking after robust earnings from major lenders, leaving Asia vulnerable to the selloff given its heavier exposure to chips.
In Hong Kong, the benchmark Hang Seng Index opened up 13 points, or 0.06 percent, at 25,022.
The tech index was down two points, or 0.05 percent, at 4,832 while the China enterprises index up 16 points, or 0.2 percent, at 8,334.
Up north, the the benchmark Shanghai Composite Index opened down 0.44 percent at 3,865.
The Shenzhen Component Index was 0.97 percent down at 14,348 while the ChiNext was 1.36 percent lower at 3,642.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.06 percent in early Asia trade while the Nikkei dived 2,939 points, or 4.4 percent, to 63,896 at one stage just before lunch.
Markets in South Korea were closed for a holiday, after the government on Thursday announced it will temporarily ban new listings of exchange-traded funds that are tied to certain major technology firms, while raising minimum required deposits for retail investors to invest in such products, in an effort to curb volatility.
“Asia’s AI trade thesis is being tested again. After a strong rally so far this year – led by semiconductors – concerns have resurfaced about potential overcapacity in the AI build-up,” said analysts at HSBC.
“A tougher question is how long the AI cycle can realistically run. Are we already at the late stage of the cycle? Has it peaked? It is an important question, and the reality is that it is difficult to time the market. That said, the fundamentals still look solid.”
Oil prices were on the rise, with Brent crude futures up 0.7 percent to US$84.83 a barrel, while US crude advanced 0.7 percent to US$79.49.
The United States began conducting a new wave of strikes against Iran on Thursday to “further degrade Iranian military capabilities”, its Central Command said in a statement.
For the week, Brent and U.S. crude futures were set to rise more than 11 percent each, marking their largest gains since April.
“The US and Iran are further away from seeing eye to eye,” said Thierry Wizman, global FX and rates strategist at Macquarie.
“The next few days may determine which side has ‘overplayed its hand’, but not without the risk of seeing some oil infrastructure destroyed in the process.” (Reuters & Xinhua)
