SINGAPORE, 13 February 2026 – Asian equity markets traded mixed to lower on Friday as investor concerns over artificial intelligence (AI) spending and weakening global technology sentiment weighed heavily on regional indices, highlighting Asia’s growing sensitivity to global tech sector volatility.
Japan’s Nikkei 225, South Korea’s KOSPI, and Hong Kong’s Hang Seng reflected cautious trading patterns, with technology-heavy sectors bearing the brunt of investor anxiety. The shift in sentiment follows a sharp sell-off in US tech stocks, prompting investors across Asia to reassess valuations and the sustainability of massive AI-driven capital expenditures.
The weakness in regional equities underscores how Asia’s markets, particularly those closely tied to semiconductor manufacturing and technology exports, remain deeply interconnected with Wall Street’s AI investment cycle.
Technology Stocks Lead Regional Decline
Technology counters were among the worst performers, reflecting growing investor concern about whether massive AI investments will deliver meaningful returns in the near term. Semiconductor companies, cloud service providers, and AI-related firms have been especially vulnerable to valuation adjustments as global investors adopt a more cautious stance toward growth-oriented sectors.
The cautious mood follows broader global market volatility, as investors increasingly question whether the hundreds of billions of dollars being spent on AI infrastructure will generate sufficient earnings growth. These concerns have triggered capital rotation away from high-growth technology stocks toward defensive sectors and cash-generating assets.
Asian markets, particularly South Korea and Taiwan, remain highly exposed due to their central role in the global semiconductor supply chain. South Korea’s KOSPI, which recently reached record highs, reflects both the opportunity and risk associated with the AI boom.
Global Tech Sell-Off Ripples Across Asia
The regional weakness follows heavy selling in US technology stocks, which has amplified global investor caution. The Nasdaq’s decline has raised questions about the sustainability of AI-driven market gains and triggered widespread portfolio rebalancing.
Foreign investors have already begun withdrawing funds from Asian equity markets amid tech sector volatility, with billions of dollars exiting regional exchanges in recent weeks. The shift reflects growing uncertainty over the near-term outlook for AI-linked companies and their ability to justify massive capital spending.
This trend highlights the extent to which Asian equity markets remain dependent on global technology demand cycles, particularly those driven by US tech giants.
China Economic Signals Add to Market Uncertainty
Investors also remain cautious amid mixed economic signals from China, Asia’s largest economy. Weak manufacturing data and ongoing concerns about domestic demand continue to cloud the outlook for regional growth, limiting investor appetite for risk.
China’s economic performance plays a critical role in shaping Asia’s broader equity market trajectory, given its position as the region’s primary trading hub and manufacturing centre.
Any signs of economic slowdown in China could further dampen investor sentiment across regional equity markets, particularly for export-dependent economies such as South Korea, Taiwan, and Malaysia.
Implications for Malaysian and ASEAN Investors
For Malaysian investors, Asia’s technology-driven volatility carries significant implications, particularly for semiconductor exporters and technology-related counters on Bursa Malaysia.
Malaysia plays a vital role in the global semiconductor ecosystem, supplying key components, assembly services, and manufacturing support to major global technology firms. As a result, fluctuations in global tech demand directly influence Malaysian equity performance.
Technology counters, industrial automation firms, and electronics exporters remain especially sensitive to global AI investment cycles and semiconductor demand.
However, long-term structural demand for AI infrastructure, cloud computing, and digital transformation continues to provide a strong foundation for Asia’s technology sector, despite short-term volatility.
Markets Enter a Critical Consolidation Phase
The current market environment reflects a transition from speculative AI enthusiasm to a more disciplined, fundamentals-driven investment cycle. Investors are increasingly focused on profitability, earnings visibility, and capital efficiency.
While Asia’s long-term growth outlook remains strong, short-term volatility is likely to persist as global markets digest the implications of rising AI investment costs, interest rate uncertainty, and macroeconomic risks.
For investors across Asia, the current correction may represent a consolidation phase rather than a structural downturn, one that could ultimately strengthen the foundation for sustainable, long-term growth.
