By Jiahui Huang and Fabiana Negrin Ochoa
Software stocks in Asia took a hit on Wednesday, as the AI panic-driven selloff in the U.S. overnight spilled over into the region.
Investor concerns that new developments in artificial intelligence will make existing technology obsolete wiped about $300 billion from U.S. software and data stocks on Tuesday.
Fears that AI advances will replace existing software and data analytics in the legal, financial and customer service spaces have been amplified by recent product rollouts from AI superstars Anthropic and OpenAI.
Analysts said the impact on Asia will vary market by market, but a risk-off mood was present during Wednesday's session, continuing a trend of volatility in the wider technology space.
Chinese software stocks followed their Western counterparts lower, leading declines on Hong Kong's benchmark Hang Seng Index in afternoon trade. Kingdee International fell 13%, while ITE (Holdings) lost 11%. Chinasoft International's shares dropped nearly 7%.
The software sector also led declines in the mainland Chinese market. Glory View Technology tumbled 14%, while Wangsu Science & Technology and Ucap Cloud Information Technology lost 13% each.
The Nasdaq-like ChiNext Price Index closed 0.4% lower, while Hong Kong's Hang Seng Tech Index was ended the day down 1.8%.
Indian IT companies felt the sting too, with names like Infosys, Tata Consultancy Services and HCL Technologies racking up losses of 5% to 8%.
In Australia, WiseTech slid 11%, while Xero shed 16%. The S&P/ASX 200 Information Technology index slumped over 9%.
South Korea's Kospi was relatively unscathed, finishing at yet another record high. Swissquote Bank's Ipek Ozkardeskaya attributed that to chip champions Samsung Electronics and SK Hynix, which continue to benefit from tight memory markets and strong pricing power.
Commenting on the wider pullback in Chinese tech shares, analysts at Morningstar said the sector has been hit by "a barrage of negative news" recently.
Aside from AI worries, investors have been weighing other potential headwinds including the possibility of tax hikes on Chinese internet companies, said Morningstar analyst Phelix Lee.
Looking at the broader Hong Kong and China equities space, Morningstar director Lorraine Tan said the pullback looks healthy and largely concentrated in sectors that have probably overshot fair values.
The sectors that have declined the most are ones that outperformed in 2025, including tech, Tan said in a note.
Write to Jiahui Huang at jiahui.huang@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
02-04-26 0329ET
