Stay informed with free updates<\/p>\n
Simply sign up to the Equities myFT Digest — delivered directly to your inbox.<\/p>\n
Global equities extended their declines on Wednesday, as the sell-off on Wall Street triggered by fears of an artificial intelligence investment bubble spread to Asia.<\/p>\n
South Korea\u2019s Kospi, one of the year\u2019s top-performing indices due to enthusiasm over AI, slid as much as 6.2 per cent, later recovering some gains to close 2.9 per cent lower. Japan\u2019s Nikkei 225 index closed down 2.5 per cent, and the Taiex in Taiwan dropped 1.4 per cent.<\/p>\n
The declines came after the S&P 500 and tech-heavy Nasdaq Composite dropped 1.2 per cent and 2 per cent respectively on Tuesday, as concerns rose about the elevated valuations for AI companies and Wall Street executives warned markets were vulnerable to a retreat.<\/p>\n
\u201cA more defensive mood has gripped global markets this week,\u201d said Chris Turner, head of markets research at ING, adding that \u201cit seems clear that markets are overextended\u201d in terms of equity valuations.<\/p>\n
Hong Kong\u2019s Hang Seng index edged down 0.2 per cent and mainland China\u2019s benchmark CSI 300 rose 0.2 per cent.<\/p>\n
Tech stocks led smaller declines in Europe, with the Stoxx Europe 600 index down 0.4 per cent in a broad-based decline in early trading. Chipmakers ASML and BE Semiconductor Industries both dropped 3 per cent<\/p>\n
US markets were also poised for more muted declines on Wednesday. Nasdaq 100 futures were down 0.3 per cent. <\/p>\n
\u201cThere is some point where we will be probably closer to a correction than we are to a 10 per cent, 20 per cent [rise] up from here,\u201d said Andrew Schlossberg, chief executive of Invesco, speaking during a financial summit organised by the Hong Kong Monetary Authority.<\/p>\n
The gains in Asian stock markets this year have been concentrated in shares of companies exposed to AI demand in the US<\/a>. OpenAI, Anthropic and Elon Musk\u2019s xAI have had their values marked up repeatedly over the past year.<\/p>\n \u201cAI expectations have increased significantly in north Asia over the past month,\u201d said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas, citing a string of deals between the region\u2019s chipmakers and US AI businesses.<\/p>\n Recommended<\/p>\n
![\"The](\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fimages.ft.com%2Fv3%2Fimage%2Fraw%2Fhttps%253A%252F%252Fd1e00ek4ebabms.cloudfront.net%252Fproduction%252F9d8f5a25-1d48-4376-b0c2-71a1e0d3821c.jpg%3Fsource%3Dnext-article%26fit%3Dscale-down%26quality%3Dhighest%26width%3D700%26dpr%3D1?source=next&fit=scale-down&dpr=2&width=240\")
<\/a><\/p>\n