Most Asian markets dropped on Friday as investors dumped technology and artificial intelligence shares, with South Korea and Japan taking the brunt of the hit.
Stocks in Japan also stumbled after a hotter-than-expected inflation report for September, giving the Bank of Japan more justification to bump interest rates higher in the coming months.
Chinese stocks fell deeper into a slump after entering bear market territory on Thursday, as the earlier excitement around domestic AI companies completely lost steam.
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Asian bourses were largely mirroring the overnight drop on Wall Street. The Nasdaq had its worst session since June as traders worried that companies are spending way too much money on AI without seeing enough profit in return. A string of weak tech earnings reports only added to those worries.
US stock index futures stayed flat during Asian hours. Meanwhile, oil prices jumped to five-month peaks because of ongoing conflict in the Middle East, making traders even more hesitant to take risks.
South Korea Hits 3-Month Low as SK Hynix Pulls Solidigm IPO
South Korea was the hardest-hit market in Asia on Friday. The KOSPI index lost 2.1% and dropped to a three-month low, heading for a weekly drop of more than 4%.
Heavy selling in local chipmakers and electronics firms weighed on the index throughout the day. Shares of SK Hynix dropped as much as 3% and became one of the main drags on the KOSPI after the company canceled its plan to list its flash memory division, Solidigm, on the US stock market.
The cancellation comes as high valuations for AI stocks continue to shrink. SK Hynix has now lost roughly 34% of its value over the past month.
Its competitor Samsung Electronics dropped 2.6% on Friday and has shed 26.5% over the past four weeks.
Japanese Shares Drop as Inflation Tops BOJ Target
In Tokyo, the Nikkei 225 dropped 1.4% to a near three-month low on Friday, while the broader TOPIX index slid 1.8%, also reaching levels last seen three months ago.
Japanese trading floors were heavily pressured by the broader selloff in tech and AI names this week.
Adding to the pain, Friday's consumer price index showed core inflation rising above the Bank of Japan's 2% annual goal for the first time since December 2025.
That reading raised expectations that the BOJ will need to raise interest rates again to keep sticky price rises under control. The central bank meets next week, and market watchers expect policymakers to raise their yearly inflation projections.
Reports also revealed that the government in Tokyo is thinking about ending major consumer fuel subsidies by December, an action that could lift inflation even more.
Chinese Equities Sink Deeper into Bear Market Territory
On the mainland, the CSI 300 index lost 0.6% and the Shanghai Composite dropped 1.3% on Friday. Both indexes touched 15-month lows as tech shares faced continued selling.
The CSI 300 officially entered a bear market on Thursday, having dropped over 20% from its June high.
That slump was mainly driven by AI and tech names, where the heavy run-up in share prices earlier this year turned into steep drops.
Exporters in China are also dealing with a stronger yuan, which reached a four-year peak earlier in October. At the same time, lukewarm economic numbers have fed worries that growth in China is slowing down fast, despite ongoing support measures from policymakers in Beijing.
Hong Kong bucked the trend slightly, with the Hang Seng index gaining 0.3% on Friday. Still, the index suffered sharp losses across the week and sits close to a four-month low.
Across the wider region, markets mostly drifted lower. Singapore's Straits Times slipped 0.1%, Australia's ASX 200 dipped 0.2%, and futures on India's Nifty 50 slipped 0.2%.
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Conclusion for Businesses and Traders
The clear takeaway for merchants, corporate planners, and investors is that the artificial intelligence trade has entered a much rougher, more skeptical phase. Markets are no longer paying huge premiums purely based on AI buzz; they now want hard revenue and sustainable cash flows. At the same time, rising inflation prints in Japan and persistent central bank pressure mean borrowing costs in parts of Asia could head higher rather than lower. For businesses dealing with chip supply chains, overseas orders, or international tech hardware, this is a time to keep cash reserves healthy, guard against currency volatility, and avoid assuming that past tech spending momentum will carry on automatically.