Nikkei enters bear market as Asian stocks crash on AI sell-off; Kospi triggers circuit breaker

The Nikkei 225 has entered a bear market, falling more than 20% from its recent peak, while Asian equities broadly sold off on a wave of selling tied to artificial intelligence-related stocks. South Korea's Kospi triggered a market-wide circuit breaker, halting trading after a sharp intraday decline. The transmission channel here is risk appetite and valuation repricing: AI-linked names carry heavy weightings in both indices, so a reassessment of AI earnings expectations quickly feeds through to index-level losses and forced de-risking by leveraged and momentum-driven investors. The Kospi is particularly exposed given the concentration of semiconductor and memory-chip makers among its largest constituents, while the Nikkei's exposure runs through its heavy weighting in technology and chip-equipment companies. Traders will watch the next US session and any follow-through in Nvidia and other AI bellwethers, as well as Japanese and Korean export data, for signs of whether the selling reflects a durable earnings reassessment or a liquidity-driven unwind.

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