Global stock markets slid to a one-month low on Tuesday as investors bailed out of chipmakers around the world, spooked by fresh Chinese competition and growing doubts about how the artificial-intelligence boom is being paid for. The MSCI All Country World Price index, a broad gauge of global shares, fell 0.6% to its lowest level since late June. Adding to the mood, traders are now weighing the chance of a US interest-rate rise as soon as this week.
The pain was sharpest in Asia. South Korea's main index, the KOSPI, dived more than 10% to a three-month low, tripping an emergency circuit breaker on the way down and heading for its worst month on record — a steeper fall than during the 1997 Asian financial crisis. Memory-chip giants SK Hynix and Samsung Electronics each shed more than 12% as a long, stratospheric rally unwound in a hurry.
What set it off
Two China worries lit the fuse. Reports said the country had started making its own advanced chip-production machines, the deep-ultraviolet lithography tools it used to import, while a strong market debut for Chinese memory maker CXMT stoked fears of tougher competition in the memory business. On top of that came nerves about the sheer cost of AI. Nvidia had already dropped 5% after the Wall Street Journal reported it was in talks to provide roughly $250 billion in financing guarantees for OpenAI as part of a huge data-centre project. “You’ve seen the companies paying for AI, the hyperscalers, not really participating because of concerns about the cost and the degree of leverage that needs to be taken on,” said Dorian Carrell, head of multi-asset income at Schroders.
The local sting
South Africa felt it too. The JSE’s All-Share index eased 0.3% by late afternoon, with Sasol, Implats and Glencore all falling almost 4% as commodity prices slid. The index is now hovering around its lowest levels since September last year. The rand traded at R16.74 to the dollar, after touching R16.82 earlier in the day.
The real test comes later this week, when some of AI’s biggest spenders — Microsoft, Amazon, Meta and Apple — report earnings that investors will comb for any sign the boom is worth its mounting bill.
