Tech firms tumbled Thursday as investors contemplated the outlook for the AI boom after Democrats swept the US midterms, partly on the back of growing anger over the rapid building of data centres across the country.

In Hong Kong, the benchmark Hang Seng Index soared 877 points, or 3.7 percent, to end at 24,796 on comparatively high turnover of HK$356.67 billion.

The tech index rose 218 points, or 5.5 percent, to 4,154 while the China enterprises index gained 311 points, or 3.9 percent, to 8,369.

On the mainland, the Shanghai Composite Index closed up three points, or 0.1 percent, at 3,689 on turnover of 979.71 billion yuan.

The Shenzhen Component Index was 135 points, or 1.2 percent, higher at 11,471 on turnover of nearly 1.14 trillion yuan while the ChiNext Index was up 22 points, or 0.87 percent at 2,566 on turnover of 576.11 billion yuan.

The tech losses, which happened mostly in tech-heavy benchmarks like the Nikkei and Kospi, came after US President Donald Trump's Republicans were dealt an historic defeat that was blamed on high prices, tariffs and the Iran war.

The result stoked hopes he will look to wind down the Middle East conflict, which would help temper inflation and even soften his stance on trade.

But AI-linked firms came under the cosh amid fears for planned data centre construction projects as well as renewed scrutiny from newly installed Democrats on Capitol Hill.

The sector had already been in the crosshairs of investors owing to questions about the vast sums pumped into new facilities, R&D and chip development, and when any companies would see a profit.

Charu Chanana at Saxo Markets said the vote was accelerating a reassessment of AI that was already under way.

"A Democratic Congress introduces another layer of uncertainty: regulatory scrutiny," she wrote, adding that the three main risks were more oversight, data centre restrictions and capital spending uncertainty.

"The congressional scrutiny could accelerate demands for AI safety standards, independent model evaluations and greater accountability for data centre developers."

However, Chanana also said: "This is not the same as an outright anti-AI policy agenda. AI is strategically important for US competitiveness, particularly against China, and there remains considerable bipartisan interest in maintaining American leadership."

In Tokyo, the Nikkei ended 1,110 points, or 1.79 percent, in the red at 61,077, dragged lower by a sharp selloff in AI and chip shares even as the vast majority of stocks on the index rose.

The broader Topix index gained 45 points, or 1.2 percent, to 3,940.

In Seoul, the Kospi closed down 300 points, or 5.28 percent, at 5,383 to a seven-month closing low, as chipmakers tracked overnight losses in US tech stocks on worries about a slowdown in AI investment following a Democratic win in the midterm elections. (Agencies)




Edited by Tony Sabine