KOSPI was by far the worst performer, losing 6% as chipmakers dropped sharply

Asian stocks mostly retreated on Friday as investors locked in recent profits in the technology sector and pivoted into more economically sensitive names.

This trend saw Japanese and South Korean markets clock deep losses, especially as chipmaking and artificial intelligence shares extended recent declines. Japanese shares were also pressured by increasing speculation that the Bank of Japan will raise interest rates later this month.

KOSPI was by far the worst performer, losing 6% as chipmakers dropped sharply.

Samsung Electronics Co Ltd and SK Hynix Inc dipped over 8% apiece, although they did recoup some of their initial losses.

Nikkei 225 also underperformed, losing 1.6% on losses in tech and chipmaking names. The sector had a strong run-up in recent weeks on optimism over AI.

Chip and AI majors including SUMCO Corp., Ibiden Co Ltd, and Renesas Electronics Corp were the worst performers on the Nikkei.

The broader TOPIX index was flat on Friday, aided by gains in industrials and consumer stocks.

Japanese markets were also pressured by increased speculation over a BOJ rate hike in June, especially after Governor Kazuo Ueda signalled earlier this week that the central bank will discuss raising rates later in the month.

Stronger-than-expected wage income data for April, released on Friday, pointed to the BOJ having more headroom to raise rates. Wages and inflation are the central bank’s two main considerations for rates.

Broader Asian markets were mostly lower. Hang Seng index declined 0.8%, also pressured by losses in tech, while Shanghai Shenzhen CSI 300 and Shanghai Composite indexes kept to a tight range.

ASX 200 shed 0.6%, while Straits Times index slipped 0.1%.