Japan and South Korea Markets Decline Due to Semiconductor Sector Losses

In Asia on Tuesday, stock markets in Japan and South Korea fell sharply. The reason was losses in U.S. chipmakers' stocks and concerns about rising inflation in the States. In Asia, this triggered a broad sell-off in tech stocks. An additional factor was the new memory architecture from Chinese semiconductor manufacturer CXMT.

South Korea was hit the hardest: the Kospi index fell more than 7% during the day, reaching its lowest point since late July. Japan's Nikkei 225, which also includes many tech companies, lost 1.9% and closed at 67,700 points. The broader Topix finished trading almost unchanged at 4,107 points.

In South Korea, the decline was so rapid that at 9:48 local time, the exchange triggered a 'Sell-Side-Sidecar': programmable sell orders are paused for five minutes. The rule is activated if the Kospi 200 futures are down 5% or more for at least a minute. Unlike a 'circuit breaker,' which halts trading entirely, regular stock trading continues. The measure is designed to prevent automatic sales from accelerating the decline and gives investors a brief pause to reassess the situation.

Other Asian markets mostly weakened. Taiwan's Taiex lost more than 2% at one point, while Hong Kong's Hang Seng and Shanghai Composite fell by about 1% each. Conversely, Singapore's Straits Times Index remained slightly in the positive.