HK cheer as Trump thumping may spell woe for AI boom
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,…
Tech stocks experienced a significant decline on Thursday following the Democratic victory in the US midterms, which raised concerns about the future of the AI boom. The rapid construction of data centers across the country fueled growing investor anxiety. Hong Kong's Hang Seng Index surged 877 points, or 3.7%, to close at 24,796, driven by high trading volume.
The tech-focused index increased by 218 points, or 5.5%, to 4,154. Meanwhile, mainland China's Shanghai Composite Index remained stable at 3,689, with a minimal 0.1% rise. On the other hand, the Shenzhen Component Index rose 135 points, or 1.2%, to 11,471, and the ChiNext Index gained 22 points, or 0.87%, to 2,566. The tech-related losses were primarily observed in major benchmarks like the Nikkei and Kospi.
This downturn came after the US midterms resulted in Republicans' historic defeat, attributed to factors like high prices, tariffs, and the Iran war. The unexpected outcome has led to hopes that President Donald Trump may seek to de-escalate the Middle East conflict, which could help alleviate inflation and ease his trade policies.
However, the downfall of AI-linked companies was driven by fears of potential data center construction projects and increased scrutiny from the newly elected Democrats in Congress. Tech experts like Charu Chanana at Saxo Markets noted that the election has accelerated a reassessment of the AI sector. The main concerns raised by Democrats include more regulatory oversight, restrictions on data centers, and uncertainty surrounding capital spending.
Chanana explained that the congressional scrutiny could prompt demands for AI safety standards, independent model evaluations, and greater accountability for data center developers. Nonetheless, Chanana emphasized that this is not an outright anti-AI policy agenda. AI remains strategically important for the US, particularly in the context of competition with China, and there is still substantial bipartisan interest in preserving American leadership in this field.
Nikkei, Kospi, and other key indices in Tokyo and Seoul experienced declines, with the Nikkei down 1.79%, the Kospi falling 5.28%, and the Topix index rising 1.2%.
Written by urgent.news from RTHK News - Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
