Asia’s major equity indices closed Thursday’s session without a clear directional trend, with some markets posting sharp gains while others recorded steep losses. A rotation of investment flows across the region’s stock markets, driven by the United States midterm elections, penalised Asian semiconductor manufacturers while lifting markets that had fallen out of investor favour, from China to Australia.

In Japan, the Nikkei fell 1.79% while the Topix gained 1.16%. In China, Hong Kong’s Hang Seng rose 3.57% and the Shanghai Composite edged up 0.10%. Taiwan’s TWSE declined 3.20%, and South Korea’s Kospi tumbled 5.28%.

Shares in South Korea’s Samsung Electronics and SK Hynix sank more than 7% and 5%, respectively, as investors began pricing in the risk of tighter regulation of data centres in the United States following the Democrats’ victory in the midterm elections, which secured the party a majority in both the Senate and the House of Representatives.

Moving in the opposite direction, Chinese e-commerce giants Tencent Holdings and Alibaba Group gained more than 6%.

The divergence across global equity markets stems from the Democrats’ decisive midterm victory, which has fuelled fears of tighter regulatory oversight in high-growth sectors, particularly semiconductor manufacturers. At the same time, expectations that the party will seek to bring the war in Iran to an end have contributed to a decline in oil prices, benefiting more traditional segments of the economy, even as Brent crude recorded a modest decline while remaining below US$100 per barrel.

“We are seeing a clear continuation of the rotation out of semiconductor manufacturers,” Tim Waterer, chief market analyst at KCM Trade, told Bloomberg. “The Democratic victory raises the real possibility that the expansion of data centres for Artificial Intelligence could run into a regulatory wall, if the party follows through on its pre-election promises. That has kept semiconductor sector stocks under pressure across the region,” he added.

Another illustration of this divergence was the performance of Japan’s own equity benchmarks. The Nikkei 225, which includes major semiconductor manufacturers and related companies, fell 1.8%, while the broader Topix index rose nearly 1.2%.

Elsewhere in the market, shares in Toyota Motor surged almost 17% in Tokyo after the company raised its annual profit forecast, citing strong demand for its hybrid vehicles.