South Korean Stocks Plunge Over 10% on AI Spending Concerns
South Korean stocks crashed more than 10% on Tuesday as investor skepticism over tech giants' heavy spending on artificial intelligence (AI) intensified, according to Yonhap News. The benchmark Korea Composite Stock Price Index (KOSPI) lost 732.09 points, or 10.84%, to close at 6,023.66, after plunging to as low as 5,830.39 during the session.
The decline marked the lowest closing level since April 14, when the index finished at 5,967.75. After opening 5.26% lower, the KOSPI extended its losses throughout the day, plunging more than 8% in the morning. At 10:14 a.m., the bourse operator activated a marketwide circuit breaker, halting trading of KOSPI-listed shares for 20 minutes.
The selloff followed an overnight decline on Wall Street, triggered by rising doubts about the returns on massive AI infrastructure investments by major technology companies. The PHLX chip index, a gauge of U.S. semiconductor stocks, extended its recent losses, falling 2.2%.
Trade volume was light at 324.2 million shares worth 33.69 trillion won (approximately US$23 billion), with losers sharply outnumbering winners—875 stocks declined while only 36 advanced. Foreign investors sold a net 4.97 trillion won worth of local shares, while individual investors bought a net 4.33 trillion won and institutions purchased a net 630.1 billion won.
Seo Sang-young, an analyst at Mirae Asset Securities, commented: "Today's heavy loss was not because of new negative factors, but because of issues that have long been talked about in the market, coupled with contracted investor sentiment ahead of the releases of big tech firms' quarterly reports."
SK hynix Inc., the world's second-largest memory chipmaker, is scheduled to announce its earnings report on Wednesday, with investors closely watching for any signals on AI-driven demand and capital expenditure plans.