Asian Markets Wrap | Chinese market slip to 3 months low | KOSPI still in turmoil

16 Jul 2026 , 07:54 PM

Market Briefs

China | Shanghai Composite 3,882.41 | -73.17 | -1.85%

• Shanghai Composite dropped 1.85% to 3,882.41, its lowest level in more than three months.
• Shenzhen Component slid 1.97% to 14,488.7.

A broad selloff in technology and chipmaking shares weighed on the market, with Cambricon Technologies, SMIC, Zhongji Innolight and NAURA Technology all posting losses.

Sentiment was further dampened by data showing China’s GDP grew at its weakest pace since Q4 2022, falling below Beijing’s 2026 growth target range of 4.5%-5.0%.

Investors are increasingly questioning whether robust earnings growth can continue to justify elevated valuations in China’s tech sector.

Japan | Nikkei 225 66,835.54 | -1,930.97 | -2.83%

• Nikkei 225 fell 2.83% to 66,835.54, ending a two-day winning streak.
• Memory chipmaker Kioxia skidded around 15%.

Chipmaking equipment company Tokyo Electron dropped 4.5%, while chip-testing equipment maker Advantest gave up 5.9%.

SoftBank Group shed 6.3%, as selling of AI-related shares weighed heavily on the broader index.

Investors stayed cautious after a report said ASML plans to raise prices, adding to concerns over stretched semiconductor supply-chain valuations.

India | Nifty 50 24,072.75 | -5.75 | -0.02%

• Nifty 50 closed at 24,072.75, down just 5.75 points.
• Sensex ended marginally higher at 77,186.87, up 1.44 points.

Indian benchmarks ended largely flat as investor sentiment stayed cautious amid geopolitical uncertainty, elevated crude oil prices and weak cues from Asian markets.

Nifty IT, FMCG, Media, Pharma and Auto ended in the green, while Nifty Metal declined 0.33% and Nifty PSU Bank fell 0.46%.

HCL Tech, IndiGo, Wipro, Maruti and Bajaj Finance were among the top gainers, while Zomato, SBI Life, Bajaj Finserv and HDFC Bank led the losers.

South Korea | KOSPI 6,820.60 | -463.81 | -6.37%

• KOSPI sank 6.4% to 6,820.60, a bellwether-shaking single-day tumble.
• Memory chipmaker SK Hynix dropped around 11.5%, while Samsung Electronics fell about 8.8%.

The Bank of Korea’s first interest rate hike since 2023, aimed at curbing inflationary pressure from the Iran war, added to the selling pressure.

Selling of AI-related shares weighed heavily on the benchmark ahead of a Friday holiday in Seoul.

Taiwan’s Taiex ended nearly unchanged, with chipmaker TSMC gaining around 1.2% ahead of its earnings report.

Hong Kong | Hang Seng Index (HSI) 25,008.60 | +327.50 | +1.33%

• Hang Seng was the regional outlier, gaining 1.3% to 25,008.60.
• Alibaba’s Hong Kong-traded shares climbed more than 3%.

The gains came after China’s cyberspace regulator approved Apple’s Intelligence AI tool for use in China.

An Alibaba spokesperson confirmed its Qwen model will be integrated into Apple Intelligence, fueling buying in Chinese platform and AI-adjacent names even as the broader region sold off.

Key News and Impact on India

1. KOSPI Plunges 6.4% as Chip Selloff Deepens and Bank of Korea Hikes Rates

• KOSPI tumbled as much as 7.6% intraday before closing down 6.4% at 6,820.60, ending a two-day winning streak.
• SK Hynix dropped roughly 11.2-11.5%, while Samsung Electronics fell 8.2-8.8%.
• The Bank of Korea raised interest rates for the first time since 2023, a move aimed at curbing inflation pressure stemming from the Iran war.

Investors have grown more skeptical that the AI-driven rally in memory chip stocks can withstand such lofty valuations.

The selloff came just a day after KOSPI’s own 6.24% surge on Wednesday, underscoring how volatile sentiment toward AI hardware names has become.

Seoul’s exchange heads into a Friday holiday with chip stocks having given back most of the week’s earlier gains.

Impact on India: The scale and speed of KOSPI’s reversal, a 6% surge Wednesday followed by a 6.4% plunge Thursday, is the clearest illustration yet of how concentrated and fragile the AI hardware trade has become.

Indian policymakers tracking Micron’s Gujarat investment and India’s broader semiconductor ambitions should note that even the world’s leading memory chipmakers are now swinging double digits in a single session.

The Bank of Korea’s rate hike, explicitly framed as a response to Iran-war-driven inflation, also offers the RBI a preview of the kind of policy dilemma it could face if oil-driven price pressures persist through the August review.

2. Nikkei Slides 2.8% as Chip Equipment and AI Names Lead Broad Retreat

• Nikkei 225 fell 2.83% to 66,835.54, dragged lower by chip-linked stocks.
• Kioxia plummeted around 15%, Tokyo Electron dropped 4.5%, and Advantest gave up 5.9%.
• SoftBank Group, Wednesday’s biggest gainer, shed 6.3% on Thursday.

The reversal followed a report that ASML plans to raise prices, a signal investors read as a sign of tightening margins across the chip supply chain.

Attention has now turned to Taiwan Semiconductor Manufacturing Co’s earnings for a fresh read on whether the broader AI buildout remains intact.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell around 1.4%, ending a two-day regional winning streak.

Impact on India: SoftBank’s sharp reversal, up 10.7% on Wednesday and down 6.3% on Thursday, is a reminder that even structural, long-term AI infrastructure themes can see extreme day-to-day repricing.

For Indian IT services firms whose growth increasingly depends on hyperscaler and chipmaker capital spending, this volatility is a signal to watch fundamentals like TSMC’s actual capex commitments rather than daily share-price swings when assessing the durability of AI-linked order books.

3. TSMC Posts Record Earnings, Announces Additional $100 Billion US Investment

• TSMC announced an additional $100 billion in investment in US chipmaking capacity, alongside record quarterly earnings.
• The company also raised its revenue growth forecasts, reinforcing its position as a barometer for the global AI buildout.
• Dutch chip-equipment maker ASML’s shares rose about 0.9% in early trading following TSMC’s stronger-than-expected results.

The announcement came the same day chip stocks were tumbling across Seoul and Tokyo on valuation concerns.

The contrast highlights a now-familiar pattern in this cycle: hyperscaler and foundry capital commitments continuing on multi-year timelines even as short-term investor sentiment swings sharply on daily headlines.

Impact on India: TSMC’s record results and expanded US investment, arriving on a day when Asian chip stocks were being sold off hard, is a strong counter-signal to fears that the AI infrastructure cycle is cooling.

For India’s own semiconductor push, including the Union Cabinet’s approval this week of manufacturing initiatives worth nearly ₹1.9 lakh crore to expand India’s chip ecosystem and mobile-phone production, TSMC’s confidence is an encouraging data point.

It suggests global capital continues to flow into chip manufacturing capacity even during periods when public equity markets are pricing in near-term caution.

4. Hang Seng Bucks the Regional Selloff as China Approves Apple Intelligence

• Hang Seng Index rose 1.3% to 25,008.60, the sole gainer among major Asian benchmarks.
• Alibaba’s Hong Kong-listed shares climbed more than 3%.
• China’s cyberspace regulator approved Apple’s Intelligence AI tool for use in China, with Alibaba’s Qwen model to be integrated into it.

The approval removes a key regulatory hurdle that had kept Apple’s AI features unavailable to users in China, its largest market outside the US.

Hong Kong’s lower direct exposure to the memory-chip names driving losses in Seoul and Tokyo again provided a degree of insulation, a pattern seen repeatedly through the week.

Impact on India: China’s approval of Apple Intelligence, paired with Alibaba’s Qwen integration, is a reminder that regulatory decisions in China can move markets as forcefully as the AI hardware cycle itself.

For India’s own AI policy conversations, the episode illustrates how quickly a single approval can re-rate an entire sector’s sentiment, a dynamic relevant as India works through its own frameworks for foreign AI model deployment and data-governance requirements.

5. US-Iran Strikes Continue as Oil Stays Elevated; India’s Cabinet Backs Chip and Electronics Push

• Iran’s military said it targeted communications systems, a radar site and fuel depots at a US base in Jordan using attack drones.
• US Central Command said it completed a fresh wave of strikes on Iranian command centres, air-defence sites, and coastal surveillance facilities.
• Brent crude rose as much as 0.8% to around $85.65 a barrel, its fourth straight daily gain.

Despite the intensity of the strikes, broader oil prices slipped from their intraday highs as some traders continued to bet on an eventual diplomatic resolution.

Separately, India’s Union Cabinet approved two major manufacturing initiatives worth close to ₹1.9 lakh crore, aimed at expanding the country’s semiconductor ecosystem and scaling up mobile-phone production.

Impact on India: The continuing exchange of strikes, now reaching Jordan, Kuwait and Bahrain, keeps crude oil at elevated levels and sustains the pressure on India’s import bill and the rupee that has weighed on sentiment through the week.

Against that backdrop, the Cabinet’s ₹1.9 lakh crore push to expand domestic semiconductor and electronics manufacturing is a timely structural response.

It signals that policymakers are using this period of global chip-sector volatility to accelerate India’s own capacity-building, rather than simply reacting to oil-driven inflation risk.