Tech stocks lead declines in Hong Kong, mainland China on US$2.3 trillion carnage in US

On Friday, stocks in Hong Kong and mainland China plummeted, mirroring a severe downturn in US technology companies, losing over US$2 trillion in market value due to fears that a Democrat-controlled Congress could disrupt AI infrastructure development. The Hang Seng Index fell 1.5 percent to 24,458.68 by 9:32am, while the Hang Seng Tech Index experienced a staggering 2.1 percent decline.

The mainland’s CSI 300 Index dropped 1.8 percent, and the Star 50 gauge, which has substantial exposure to AI chipmakers, plummeted by 3.5 percent. South Korea's Kospi index, heavily weighted towards providers of memory chips for AI data centers, saw a more than 7 percent plunge. The Nasdaq-100 Index, a benchmark for American tech stocks, suffered its worst single-day performance since March 2020, plummeting 6.4 percent and wiping out US$2.3 trillion in market capitalization.

Newly elected Texas Democratic Governor Gina Hinojosa has called for an immediate moratorium on data center construction, citing soaring utility costs blamed on US voters. "The AI investment debate has shifted from semiconductor demand to whether there will be sufficient land, electricity, and data center capacity to support the chips already ordered," stated Stephen Innes, a managing partner at SPI Asset Management.

"The market may be pricing in a substantial slowdown in AI development before the full extent of the new political landscape's impact is known."