There's a sell-off in Asia, and Japan's Nikkei has entered a bear market. What advice is being given to investors?

Japan’s Nikkei 225 stock index plummeted 7.1% after the market opened in Tokyo on November 6 and entered bear market territory—a term used to describe a decline of more than 20% from its peak, according to CNBC. In South Korea and Taiwan, where the stock market’s largest companies manufacture chips, the major indices lost even more ground at the start of trading. Some analysts and asset managers see no reason to sell AI stocks, while others expect a prolonged downturn in the stock market.

South Korea's Kospi index fell to its lowest level since February 6 at the start of trading. A sharp drop in chipmakers’ stocks triggered an automatic trading halt, according to the FT: shortly after the market opened, the Korea Exchange suspended all trading in stocks and derivatives for 20 minutes. Shares of Samsung Electronics and SK Hynix—the world’s two largest memory chip manufacturers, which account for half of the KOSPI—fell as much as 10.7% and 13.8%, respectively, during the trading session.

Immediately after the market opened, Taiwan’s Taiex index fell 9%, following the decline in shares of its largest issuer, custom chipmaker TSMC, whose stock price plummeted nearly 10%. The sell-off then slowed: by 10:20 a.m. Astana time, the Nikkei 225’s decline had narrowed to 5.8%, the Kospi’s to 5.1%, and the Taiex’s to 3.9%. By that time, shares of Samsung Electronics and SK Hynix were trading down 5.9% and 9.6%, respectively, while TSMC shares were down 4.5%.

Asian markets followed the U.S. lead: On November 5, the sell-off in U.S. stocks was the sharpest since April 2025, according to Reuters. The Nasdaq fell 5.5% and, having lost 12% from its record close a month ago, entered correction territory (a decline of more than 10% from its peak). S&P 500 futures traded slightly lower, while Nasdaq 100 futures initially fell but then rose 0.7%.

The sell-off was triggered by the results of the U.S. midterm elections: investors fear that a Democratic victory will slow down the AI boom. Candidates who campaigned against the construction of data centers won in a number of key states, including Texas. The market fears that these policies will slow the development of AI infrastructure—and, along with it, the growth in spending on chips, servers, and other AI equipment. It is precisely this spending that has driven stock prices to record highs this year.

Victoria Green, Chief Investment Officer at G Squared Private Wealth, sees the decline as a buying opportunity. “In my view, the bet on AI is still alive,” she told CNBC. “It’s a good discount.” Green is keeping an eye on memory manufacturers’ stocks, as company executives have cited capacity shortages during this earnings season.

Li Zhe-won of Yuanta Securities points out that most of the large data centers scheduled for completion in 2027 are already under construction, although plans for 2028 are more vulnerable to regulatory changes. “Since there have been no confirmed project cancellations or downward revisions to earnings forecasts, there is little reason to join the current sell-off,” he writes in his report, as quoted by the FT.

Albert Saporta, CEO of asset management firm GAM, takes a different view. “This is just the beginning of a long-term bear market in stocks,” the FT quotes him as saying. Saporta holds a smaller share of global technology stocks in his portfolio than is found in benchmark indices, and prefers government bonds and shares of gold mining companies.

This article was AI-translated and verified by a human editor