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NEW YORK Friday, November 6, 2026

Asia

Asia's Markets Plunge Amid AI Sell-Off

Taiwan and South Korea implement emergency measures to stabilize markets amid sharp declines.

New York Editorial News Desk November 6, 2026 1 min read

The Brief

  • Taiwan's Taiex plunged as much as 9% and entered a bear market, while South Korea's Kospi dropped 8.8% and briefly broke below 5,000.
  • Taiwan to curb short selling and deploy $15 billion stabilization fund; South Korea suspends margin-loan collateral rules to prevent forced liquidations of leveraged retail positions.
  • Foreign investors continue to sell, with a record $3.1 billion outflow in Taiwan on Thursday, extending a streak of six consecutive days of selling. Local funds, however, remained net buyers for an 18th consecutive session, highlighting a growing divergence between foreign and domestic investor behavior.

Asian markets experienced sharp declines as the AI sell-off spread, with Taiwan's Taiex plunging as much as 9% and entering a bear market, while South Korea's Kospi dropped 8.8% and briefly broke below 5,000. The rapid sell-off led to market halts and triggered emergency measures by both governments.

In Taiwan, the Financial Supervisory Commission announced restrictions on short selling starting November 9, while the Finance Ministry said it is prepared to deploy its NT$500 billion ($15 billion) stock stabilization fund. South Korea's Finance Minister suspended the margin-loan collateral rule that forces brokers to dump leveraged retail positions.

Foreign investors continued to sell, with a record $3.1 billion outflow in Taiwan on Thursday, extending a streak of six consecutive days of selling. Local funds, however, remained net buyers for an 18th consecutive session, highlighting a growing divergence between foreign and domestic investor behavior.

The stabilization fund in Taiwan is expected to cover only a fraction of the foreign outflows, as the NT$500 billion fund represents roughly one-third of what foreigners have pulled out since October 6. The government also intervened in the currency market, with the USD/TWD exchange rate briefly hitting a high since April 2025 before reversing.

South Korea's measures included a three-month exemption from margin-loan collateral rules, effectively delaying forced sales. However, the waiver was optional, and brokers faced the risk of holding bad debt. Goldman analysts noted that the margin balance had fallen significantly, but the dip buyers were running low on funds.

Goldman's Seoul desk argued the leverage has already been flushed, with margin loan balance relative to market cap currently sitting at 0.6%. The problem is that the dip buyers are running low on funds, as investor deposits have collapsed 36.6% from their June peak to 88.5 trillion won, even as retail investors scooped up a net 4.5 trillion won over the past six sessions while foreigners dumped 12 trillion won.

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