Asian stocks fall as tech, bitcoin rout extends | The Asia Trade 2/6/2026

Key Concepts

• Global Tech Sell-Off: Concerns surrounding AI investment and its impact on tech company margins are driving a broad-based sell-off in global tech stocks, extending to Asian markets.
• Amazon’s Strategy & Concerns: Amazon is heavily investing in AI infrastructure ($200 billion CAPEX) and focusing on retail margin expansion through AI integration and advertising growth (over 20% growth, potential for $100B+ revenue). Concerns remain about execution given supply chain limitations.
• Japanese Political & Economic Shift: Japan is undergoing a potential political shift with the snap election of Prime Minister Sanae Takaiichi, who enjoys high approval ratings and proposes policies focused on cost of living relief and potential fiscal easing. The Bank of Japan is also moving towards normalization with potential interest rate hikes.
• Asian Market Volatility: South Korea’s KOSPI experienced a significant decline alongside the broader tech sell-off, while Thailand faces ongoing political and economic challenges. China’s Hang Seng Tech index is nearing bear market territory.
• Cryptocurrency Downturn: Bitcoin and other cryptocurrencies are experiencing a downturn due to risk aversion and regulatory uncertainty.

Amazon’s Performance and AI Investment

Amazon’s recent earnings report revealed a $200 billion investment plan for AI infrastructure, aiming to dominate the cloud provider space. While the company is confident in AWS’s pipeline growth, the substantial capital expenditure is raising concerns about margin headwinds, particularly when compared to Google’s expanding cloud margins. Amazon is focusing on expanding retail margins through AI integration across its marketplace, e-commerce platform, and logistics, alongside leveraging its rapidly growing advertising business, which grew over 20% this quarter and boasts higher margins than AWS. Poonam Goyal (Bloomberg Intelligence) predicts advertising revenue could exceed $100 billion in the next two years. However, concerns remain about Amazon’s ability to execute growth plans given current supply chain limitations. The market reacted negatively to the earnings report, contributing to a broader tech sell-off.

Global Market Reactions & Cryptocurrency

The AI-related anxieties are spreading to Asian markets, with the KOSPI (South Korea) experiencing a significant decline (over 4%, at one point over 5%), led by major tech companies like Samsung Electronics and SK Hynix. Despite the current fall, the KOSPI remains up 90% year-to-date. Cryptocurrency markets are also experiencing a downturn, with Bitcoin approaching the $60,000 level and Solana experiencing a substantial decline, attributed to investors becoming more risk-averse. The broader tech sell-off, triggered by concerns surrounding AI spending, is impacting software stocks in the US and is expected to translate to the Asian session, particularly affecting Tencent.

Japan’s Political and Economic Landscape

Japan is holding a Lower House election on Sunday, considered a “high-stakes gamble” for Prime Minister Sanae Takaiichi, who enjoys high public approval ratings (over 60%). She aims to secure a majority for her coalition, which has implications for markets and security. Voters are primarily concerned with the rising cost of living, as inflation remains above the Bank of Japan’s 2% target while wages lag. Takaiichi has pledged to end the sales tax on food for two years to address this. The potential for easing fiscal policy under Takaiichi is being discussed, though concerns remain about the sustainability of large deficits. Bond yields have risen, reflecting investor unease, as the Bank of Japan is shrinking its balance sheet aggressively. There is increasing expectation that the Bank of Japan will continue to raise interest rates, potentially three times this year, as deflationary pressures have subsided. Japanese exporters are benefiting from the weak Yen, leading to stronger corporate profits and investment. Toyota is expected to revise its earnings guidance upwards, benefiting from a recovery in China and its strength in hybrid vehicles. Tokyo Electron is also performing well, driven by strong demand for high-power memory.

China & Emerging Markets

The Hang Seng Tech index is nearing bear market territory (down 20% from its recent high). Meituan’s acquisition of a Chinese fresh groceries delivery platform for $700 million is being watched, with the stock already rising in overnight trading. A $1.4 billion IPO debut is occurring, with the offering being five times oversubscribed. Moody’s has cut its outlook for Indonesia due to policy concerns, prompting a response from the country’s FSA to strengthen financial sector resilience.

Conclusion

The current market environment is characterized by a cautious outlook driven by concerns surrounding AI investment, geopolitical factors, and evolving economic policies. Amazon’s substantial investment in AI is raising questions about profitability, while Japan’s upcoming election and potential policy shifts are creating uncertainty in Asian markets. The broader tech sell-off and cryptocurrency downturn reflect increased risk aversion and a search for clarity in a rapidly changing global landscape. Monitoring these developments – particularly the Bank of Japan’s normalization and the outcome of the Japanese election – will be crucial for navigating the evolving dynamics of the Asia trade.