Seoul and Taipei Fell 3.59% as Asia's Chip Selloff Deepened

South Korea's Kospi and Taiwan's Taiex each fell 3.59 percent on Tuesday as a selloff in chip stocks deepened across Asia.

Asia's two most chip-heavy markets fell in lockstep on Tuesday. The selling was concentrated in semiconductor shares. Both headline indexes fell by the same percentage, two chip-heavy markets meeting the same U.S. selling. Markets elsewhere in the region split, with Hong Kong, India and Australia closing higher.

Seoul gave back Monday's rebound

The Kospi closed at 5,648.79, down 210.29 points, or 3.59 percent. The fall erased the index's 2.24 percent rebound from Monday. The Kospi had opened 2.46 percent lower and touched an intraday low of 5,615.80.

Foreign investors sold 1.52 trillion won of shares, about $1.13 billion. Institutions unloaded a further 511.3 billion won. Retail investors bought 1.66 trillion won, but their buying did not prevent the decline.

Samsung Electronics fell 4.15 percent to 219,500 won. SK hynix declined 5.03 percent to about 1.4 million won. The two chipmakers anchor the Kospi, so their falls carried the index with them.

The Kosdaq, the smaller-companies board, fell 4.08 percent, or 29.97 points, to 704.39. Foreign investors sold 74.7 billion won there, and institutions unloaded 234.5 billion won. Retail investors bought 319.7 billion won.

Taipei's point fall ranked seventh in its history

The Taiex ended at 43,307.54, down 1,612.60 points, or 3.59 percent, from Monday's close of 44,920.14. It was the seventh-largest single-session point fall in the index's history. The Taiex has now fallen for four straight sessions.

Taiwan Semiconductor Manufacturing Company fell 1.50 percent to 2,295 Taiwan dollars. It accounted for about 280 points of the Taiex decline. MediaTek dropped 7.43 percent to 3,675 Taiwan dollars, and ASE Technology Holding declined 8.61 percent to 816.

The selling reached beyond chips. The financial sector fell 2.54 percent. Turnover rose to 928.06 billion Taiwan dollars, from 799.69 billion on Monday, and foreign institutional investors sold a net 107.31 billion on the main board. The index traded between 43,191.58 and 44,614.64 during the session.

The U.S. chip selloff set the tone

The Philadelphia Semiconductor Index fell 3.37 percent overnight, and the Nasdaq fell 1.07 percent. That United States weakness arrived as investors questioned returns on massive artificial intelligence spending. Reporting from Seoul framed the concern around how U.S. technology companies will finance expanding AI infrastructure.

That framing is an explanation offered in the reporting, not an established cause. Aju Press cited repeated U.S. technology bond issuance as reviving AI financing concerns across the supply chain.

Its report pointed to a wave of U.S. technology borrowing, including Oracle's reported $20 billion stock and bond raise plans. Uncertainty ahead of the U.S. midterm elections also weighed on risk appetite, the reports said.

The rest of the region diverged

Hong Kong's Hang Seng rose 0.57 percent to 23,525.97, up 132.65 points. India's Nifty 50 rose 1.58 percent to 23,810.85, a fourth straight gain. Australia's ASX 200 closed 0.34 percent higher at 8,886.80, even as its central bank raised rates for a fifth time this year.

The Hang Seng H-share Index, which tracks mainland Chinese companies listed in Hong Kong, rose 0.47 percent to 7,943.10.

Shanghai's composite fell 0.82 percent to 3,608.10, down 29.93 points. Traders were disappointed that stabilization measures unveiled the previous day looked, in market participants' view, largely recycled. The yuan also fell about 0.3 percent after a reserve-requirement change in Beijing.

Singapore's Straits Times eased 0.65 percent to 5,269.29, a fourth consecutive decline. Japanese markets were closed for Culture Day. The split left the day's damage concentrated where chip exposure is heaviest.

What remains unknown

What remains unknown starts with whether U.S. chip selling extends into Tuesday's U.S. session. Asian closes cannot answer that. A second U.S. leg down would test whether Seoul and Taipei stabilize or extend the fall.

The midterm outcome is also unknown. First polls close at 6 p.m. Eastern time on Tuesday, and results will land after Asian markets reopen. Tokyo's reaction is a further unknown, because its market was shut on Tuesday.

Whether foreign selling persists is a third unknown. One session of heavy outflows does not establish a trend. The next sessions' flow figures will show whether Tuesday was an exit or a pause.

What to watch next

What to watch next is the U.S. semiconductor open and whether foreign selling in Seoul and Taipei persists for a second day. Watch Tokyo's reopening on Wednesday for a delayed reaction to the selloff. Watch, too, whether chip shares attract buyers after the steep falls.

Watch the midterm results as the first polls close at 6 p.m. Eastern time. Watch whether Taiwan's turnover stays elevated, which would signal continued repositioning. A calmer U.S. chip session would be the first sign the regional fall is contained. A stabilization in turnover and flows would matter more than a one-day bounce in either index.