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A rout in Asia’s tech-heavy markets deepened on Friday as fear of increased regulatory scrutiny and a slowdown in AI build-out precipitated the steepest decline in US stocks since the tariff-triggered “Liberation Day” selloff in April 2025. Japan’s Nikkei slumped 7 per cent immediately after the opening bell while benchmark share price indices in South Korea and Taiwan dropped more than 8pc. Stocks across the region then appeared to stabilise as dip buyers emerged. European stock futures also cut initial loss and were last down 0.6pc. Nasdaq futures were up 1.4pc though sentiment remained fragile. Wall Street’s volatility “fear gauge” soared, the Nasdaq sank 5.5pc and $3 trillion was wiped off S&P 500 firms, with investors worried Democrats, who dominated midterm elections this week, will apply brakes to the AI boom. The political jitters are hitting an AI trade already on shaky footing due to worry about return on companies’ enormous investment in artificial intelligence-related infrastructure. “There is also clearly an element of panic in the selling, and positioning is making the adjustment much more violent,” said Charu Chanana, chief investment strategist at Saxo. “When investors begin unwinding these positions simultaneously, the selling can become self-reinforcing, particularly if leverage and forced liquidations are involved.” The meltdown spooked retail investors and hedge funds alike, while policymakers and regulators scrambled to stem the selling. AI chipmakers Samsung Electronics and SK Hynix fell nearly 10pc and 12pc respectively in South Korea. Kioxia plunged 14pc in Japan while TSMC fell as much 8.5pc in Taiwan. AI investor SoftBank Group slid 11pc, while the cost of insuring against the Japanese firm defaulting on debt jumped to its highest in four years. “The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone,” said Dong Baozhen, chairman of asset manager Lingtong Shengtai. “The US…

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