It was like pulling teeth in early trading on Asian markets on Wednesday as the pain of a wobbly FANG was felt across the region. Stocks in Facebook, Amazon, Netflix and Google’s parent company Alphabet slumped as the darlings of the Nasdaq suffered their worst day in more than three years in overnight trading.
Known collectively as FANG, these tech giants came under fire after investors became spooked by Facebook’s ongoing privacy scandal, triggering a sharp sell-off.
The ripples were quickly felt on major Asian markets with the Nikkei 225 tumbling by more than 286 points, or 1.3%, to close at 21,031.31, while South Korea’s Kopsi dropped 1.34% to finish at 2,419.29.
In Hong Kong, the Hang Seng Index fell by 2.5% in afternoon trading and Shanghai’s Composite Index dropped by just under 1.4%, with the ASX in Sydney ending the day nearly 1% down.
“There is a sense that there will be more regulations on Facebook, or FANG, and that the cost of compliance will increase,” Nobuhiko Kuramochi, the chief strategist at Mizuho Securities, told Reuters.
The biggest losses came in Japan and South Korea. Shares prices in Samsung Electronics and Tencent dropped significantly on the broader MSCI Asia Pacific Index.
This followed a rout in the NYSE FANG+ index on Wall Street, which tumbled 5.6% – the biggest one-day loss since September 2014.
Twitter led the plunge with a 12% decline, with Facebook, Amazon, Netflix and Google’s parent Alphabet falling by nearly 4%.
“The fact that the tech selloff accelerated on heavy volume probably means a sell-off will continue,” Stephen Carl, the head trader at Williams Capital Group, told Bloomberg
“One thing is feeding into another here: uncertainty over the [US] tariffs and [Mark] Zuckerberg’s testimony [to the US Congress] as well as weakness in Tesla. People don’t know which way things are going to go and are taking profits,” he added.
Trade tensions with China have also fueled concerns, sparked by President Donald Trump’s protectionist moves. In turn, this has brought back volatility into global markets.
Already the White House has rolled out measures to crack down on Chinese investments in technology companies, which the United States considers sensitive. There are also moves to punish Beijing for violating intellectual property rights.
Against this background, there are fears of a surge in short-term borrowing costs after the US Federal Reserve rolled back stimulus policy. To compound the problem, data released on Tuesday showed that US consumer confidence declined in March, falling below expectations.
“I think overall we have been pricing in for Goldilocks and we are closer to Frankenstein, to be honest,” Steen Jakobsen, the often-bearish chief economist at Danish investment house Saxo Bank, told CNBC.
– with Reuters and Bloomberg