Asian shares sink despite AI boom

**Leanna Byrne** (0:00)
A sharp sell-off in AI stocks sweeps across Asia. It's World Business Express from the BBC World Service. I'm Leanna Byrne. India joins a select group of countries running hydrogen-powered trains, and Netflix shares fall after its latest outlook disappoints investors.
In Japan, the benchmark Nikkei Index has fallen more than 4% and it's part of this global sell-off in technology and artificial intelligence related shares, which is gathering pace. On Wall Street, chip makers are among the hardest hit as investors are questioning whether the huge sums being poured into AI will ultimately deliver the profits that are promised. Randeep Somal is fund manager at M&G Investments and joins me now. Hello, Randeep.

**Randeep Somal** (0:50)
Hello, Leanna.

**Leanna Byrne** (0:50)
So why has Japan been hit so hard in particular?

**Randeep Somal** (0:55)
What this AI fear is spreading all throughout Asia, and now just as the US has opened as well. A lot of the semiconductor names, the memory manufacturing names are based in Japan as well. So I'll give you an example, Quixa Holdings, which overtook Toyota to become the largest listed company in Japan has halved since its peak in just a matter of weeks, and yet the share price is still up 400 percent for the year.

**Leanna Byrne** (1:19)
Really interesting. And why? Just why these chip makers are people aren't interested in these shares anymore?

**Randeep Somal** (1:26)
It's not that they're not interested, but the Chinese AI startup called Moonshot has brought out a new model called Kimi K3, and they believe that it can rival the likes of OpenAI and Anthropic at much, much lower costs. Now, if it can, maybe we don't need the highest end chips from NVIDIA or the highest end memory from Quixa and SK HINEX.

**Leanna Byrne** (1:46)
Right. Because demand for the technology, those chip makers that underpins AI seems to be very strong based on the latest results from TSMC that we saw yesterday.

**Randeep Somal** (1:56)
It is. I mean, at the moment, it still continues to grow and costs are continuing to go up as well. So much in the same way we had the deep seek issue last year when a Chinese company bought out a new cheaper model, we're seeing it constantly tested. And now this Chinese startup, Moonshot, has brought out a new model that thinks it can do things a lot cheaper as well.

**Leanna Byrne** (2:16)
I think it's fair to say some of these shares have still made extraordinary gains this year. So do we really think it's a fundamental reassessment of AI or some other theories say investors are simply taking profits?

**Randeep Somal** (2:28)
I mean, it's a mix of both. Like these companies, as you've mentioned, have done so, so strongly and their valuations are incredibly high, which makes them much more susceptible now to any disruption risk from new technologies.

**Leanna Byrne** (2:40)
All right. Well, just tell me what do I need to watch out for, to see whether this is a short-term correction or it's actually the beginning of a more sustained downturn?

**Randeep Somal** (2:51)
The exact same thing happened in April last year with DeepSeek. Entire market got very scared. But then as people got to know DeepSeek a bit more, understand the model, it was nowhere near as good as the Western AI companies. I think for now, we're going to have to look at the Kimi K3 model and see if it can live up to expectations.

**Leanna Byrne** (3:09)
All right. Well, we'll keep our eye out. Well, you stay out right there, Arandip. India has launched its first hydrogen powered train, joining a small group of countries using the technology. The 10 coach train can carry up to 2,600 passengers and will run along a 90 kilometer route in the northern state of Haryana. The 12 million dollar project forms part of India's push to modernize one of the world's largest rail networks and cut its carbon emissions. Iruna Dey Mukherjee is in Delhi and he told me how it works.

**Arunadeh Mukherjee** (3:40)
This is new. India has become only the fifth country in the world to operate a hydrogen powered train. This will cover a 90 kilometer stretch between two northern cities of Jind and Sonipat. It's going to be twice a day. And essentially the train showcases India's efforts at transitioning to cleaner fuels and move away from fossil fuels. So unlike conventional diesel trains that burn fuel to generate power, a hydrogen train carries a small power plant on board in the form of a fuel cell. Hydrogen stored in the train cylinders then combines with oxygen from the surrounding air inside the fuel cell. Now this produces electricity that powers the traction motors and essentially the train starts moving. And now the only direct byproducts of this reaction are water, vapor and heat. There is no combustion, no smoke, no carbon emissions, which is the big sort of wind point. So in short, if you're out, if you picture an equation, it's hydrogen plus oxygen gives you electricity and water vapor and the train starts moving.