Tech shares sank across Asia on Friday, the yen rose and government bonds surged towards their biggest monthly gain in nearly three years, as investors rushed to safety over worries that huge and rising artificial-intelligence spending may not deliver sufficient returns, Reuters reported from Singapore on October 30.

Source: Reuters via WNCY

Shares in Google parent Alphabet fell 12.6% on Wall Street and slid a little further after hours, wiping out $500 billion in market value — yaani half a trillion dollars — as massive AI spending turned the company's cash flow negative, Reuters said.

An aftermarket plunge of 23% in Intel shares and a drop of 7% in Amazon shares, as they too burn through cash, drove Nasdaq 100 futures down 1.9% and sent stocks of chipmakers around Asia into a tailspin, according to Reuters.

Asia's chip-heavy markets take the hit

South Korea's KOSPI fell more than 3% on Friday, taking its fall in October to nearly 16%, while Japan's Nikkei fell over 2% and was on course for a decline of 5% this month, Reuters reported. CNBC-TV18 reported the KOSPI closed 3.96% lower, with chip heavyweights Samsung Electronics and SK Hynix both declining, while Taiwan's TAIEX shed 3.19% and the Nikkei 225 dropped 1.88%.

Source: CNBC-TV18 via TradingView

"The market isn't necessarily questioning whether the AI buildout can be financed," Pepperstone analyst Chris Weston told Reuters. "It's increasingly questioning whether shareholders will earn an adequate return on the enormous capital being deployed."

In China, the blue-chip CSI300 headed for its largest monthly fall in a decade, after nearly four months of AI stocks falling on fears that a slowdown in demand for chips and other data-centre equipment could crush revenues, Reuters said.

Money runs to bonds and the yen

Benchmark 10-year US Treasury yields fell by more than 7 basis points in Tokyo trade on Friday to 4.91%, a fall of some 37 basis points through October — the largest one-month drop since December 2023 — while two-year yields dropped by more than 8 basis points to 4.57%, Reuters reported. The yen strengthened about 0.3% to 157.20 per dollar.

The Bank of Japan left interest rates on hold, which was expected, but Nikkei futures slipped after the central bank unveiled plans to sharply accelerate sales of its stock funds next year, Reuters said. Oil prices rose on Friday, poised for a fourth monthly gain; CNBC-TV18 put Brent crude at $115.44 a barrel and US West Texas Intermediate at $102.84 in early Asian trade.

Nerves were also frayed by a potentially record-breaking hack at Binance, the world's biggest cryptocurrency exchange, which drove down bitcoin and other cryptocurrency prices, Reuters reported; bitcoin hit a six-week low before cutting losses to trade 0.9% lower at $78,171.16.