Asian shares mixed as AI-data centres slide on regulation worries

Asian markets saw mixed results on Thursday, with regional chipmaking shares dropping due to expectations of stricter regulations on technology. The decline in South Korean and Japanese technology stocks was largely driven by concerns over potential U.S. Democratic-led legislation that could impose tighter oversight on AI development and data center construction.

This uncertainty may lead to a slowdown in capital expenditures. Despite these concerns, markets elsewhere in Asia remained relatively stable, with global bond yields easing and Brent crude prices falling to $95 a barrel, indicating optimism that the U.S.-Iran conflict might be nearing an end.

The easing of global bond yields was influenced by speculation regarding the impact of a divided government on various issues, including the ongoing war in Iran, President Trump's policy agenda, and the trade of AI technology. Gold prices experienced a nearly 2 percent increase, reaching $4,125 an ounce, marking the largest jump since August.

This rise occurred as both the dollar and Treasury yields declined. In China, the Shanghai Composite index managed to climb by 0.1 percent to 3,689.91, marking a second day of recovery after financial regulators introduced measures to inject liquidity into the market.

Hong Kong's Hang Seng index experienced a significant surge of 3.67 percent, reaching 24,796.98, largely propelled by tech giants such as Alibaba and Tencent. Conversely, Japanese markets suffered sharp declines, primarily due to a substantial sell-off in AI and chip-related shares. The Nikkei average dropped by 1.79 percent to 61,077.90, while the Topix index increased by 1.16 percent to 3,940.39.

Companies involved in semiconductor testing, like Advantest, saw a steep decline of 14.7 percent. Additionally, Japanese semiconductor equipment manufacturer Tokyo Electron experienced a drop of 9.4 percent, fueled by expectations that Democratic forces in the U.S. Congress would potentially slow down the expansion of data centers, thereby reducing demand for semiconductors.