Asian technology stocks rebounded on Monday following a sharp selloff that pushed several regional indices into bear market territory, as investors reassessed the impact of potential US regulatory restrictions on artificial intelligence infrastructure, according to a report by the Financial Times.

Taiwan's Taiex index led the recovery, rising 4.9% after authorities introduced market support measures, including restrictions on short selling. Semiconductor manufacturer TSMC gained 4.7%, while Japan's Nikkei 225 advanced 2.3%. South Korean chipmakers Samsung Electronics and SK Hynix recorded more modest gains of 0.6% and 0.4%, respectively, although the broader Kospi declined 0.8%.

The rebound followed steep losses across Asian markets last week, driven by concerns that Democratic victories in the US midterm elections could lead to tighter regulation and delays to the expansion of AI data centres. Several technology-heavy benchmarks fell more than 20% from their recent peaks, entering technical bear market territory as investors reduced exposure to companies supplying the US AI infrastructure boom.

Hugh Gimber, global market strategist at JPMorgan Asset Management, described the selloff as an overreaction, arguing that regulatory changes could increase costs and delay projects without fundamentally disrupting the pace of data centre development.

However, analysts at BNP Paribas noted a broader rotation away from Asian technology stocks, with investors increasingly reassessing valuations and concentrated exposure to the AI investment cycle. Jason Lui, the bank's head of Asia-Pacific equity and derivative strategy, said investors had become more selective following a peak in technology buying during July.

Joshua Crabb, head of Asia-Pacific equities at Robeco, highlighted opportunities in less AI-dependent markets, including India, south-east Asia, Hong Kong and Australia, as investors seek to diversify away from crowded semiconductor and technology positions.