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Asian stock markets plunge with circuit breakers triggered; Korea hits circuit breaker during trading, Nikkei falls below the 50,000 mark

Asian stock markets plunge with circuit breakers triggered; Korea hits circuit breaker during trading, Nikkei falls below the 50,000 mark

深潮2025/11/05 06:27
By: 深潮TechFlow
Wall Street warns: This is just the beginning, and the panic triggered by the bursting of the AI bubble has only just started.
Wall Street warns: This is just the beginning, the panic triggered by the AI bubble burst has only just started.

Author: Golden Ten Data

On Wednesday, Asian stock markets followed the overnight sell-off in U.S. stocks, as concerns over excessive valuations undermined market confidence.

As of press time, the South Korean stock market led the decline with a drop of over 6%, as valuation concerns heavily hit recently strong-performing chip, defense, and shipbuilding stocks. Chip manufacturers Samsung Electronics and SK Hynix were the main drag.

The KOSPI index fell below the key 4,000-point mark and retreated further from its historical high. This drop brought its two-day cumulative decline to over 7%, marking its worst performance since August 2024.

After a 5% drop in the Korea Composite Stock Price Index 200 futures, the Korea Exchange activated a circuit breaker on the KOSPI index, pausing program trading for five minutes. As the decline widened, the Korea Exchange also suspended program trading for KOSDAQ futures.

Since the beginning of this year, the South Korean stock market has been one of the best-performing markets globally, as renewed optimism about artificial intelligence and a presidential push for corporate reform drove continued buying. However, a series of warnings from Wall Street executives about excessive valuations now threaten to dampen investor enthusiasm.

"After a 20% surge in October alone, investors are showing signs of fatigue, coupled with concerns about an AI bubble emerging," said Huh Jae-Hwan, a strategist at Woori Investment & Securities. "There are indeed bubble-like areas in the market."

Asian stock markets plunge with circuit breakers triggered; Korea hits circuit breaker during trading, Nikkei falls below the 50,000 mark image 0

The Nikkei 225 index fell below 50,000 points for the first time since October 27, dropping 3.7% intraday.

Taiwan's weighted index opened down 1.67% on Wednesday. Hong Kong stocks saw the Hang Seng Index open down 0.97%, and the Hang Seng Tech Index open down 1.75%. A-shares saw the Shanghai Composite Index open down 0.95%, the Shenzhen Component Index open down 1.68%, and the ChiNext Index open down 2.08%.

U.S. stocks and European stocks index futures also continued to decline. The Euro Stoxx 50 index futures fell more than 1%, Germany's DAX index futures fell 1%, and the UK's FTSE index futures fell 0.4%.

Before the current pause in the global stock rally, booming prospects for artificial intelligence and expectations of continued Federal Reserve rate cuts had pushed U.S. benchmark indices up nearly 40% from their April lows. But as gains became increasingly concentrated in a few stocks, both sentiment and technical indicators showed signs of overheating, and Wall Street giants pointed out that a market correction would be healthy for development.

After CEOs of Wall Street giants Morgan Stanley and Goldman Sachs questioned whether sky-high valuations could be sustained, concerns grew that the stock market might be overinflated. The sell-off intensified after "The Big Short" prototype and hedge fund manager Michael Burry disclosed short positions in Palantir and Nvidia.

"Regardless of the medium- or long-term trend, the stock market is now prepared for some kind of substantial short-term correction," said Miller Tabak analyst Matt Maley.

Pepperstone Group's head of research Chris Weston said: "The whole market is a sea of red (declines). There are few reasons to buy now, and as we approach Nvidia's November 19 earnings report, the market lacks short-term catalysts."

Capital Group CEO Mike Gitlin said at a financial summit organized by the Hong Kong Monetary Authority on Tuesday that corporate earnings are strong but "the challenge lies in valuation levels."

"Market standards are constantly rising, and now slightly better-than-expected results are no longer enough to drive stock prices higher," Anna Wu, cross-asset strategist at Sydney's Van Eck Associates, said in an interview with Bloomberg TV.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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