South Korea's KOSPI Plunges Over 12% as Semiconductor Selloff Intensifies

South Korea's benchmark KOSPI index tumbled on Wednesday, extending a severe selloff driven by mounting concerns over the sustainability of the artificial intelligence boom. The decline was sharp enough to trigger a market-wide circuit breaker for the second consecutive session as investors aggressively sold off heavyweight technology stocks.

Market Plunge Details

By 04:23 GMT, the KOSPI had slumped 12.3% to 5,283.12 points, its lowest level since early April. The Korea Exchange halted trading for 20 minutes after the index hit an 8% drop, a measure designed to curb market volatility. The move followed a nearly 11% plunge on Tuesday, which was the index's worst single-day performance in almost five months.

The decline was led by the country's dominant chipmakers. Shares in SK Hynix Inc plummeted more than 16%, while Samsung Electronics also experienced sharp losses. The selloff mirrored a broader regional retreat in semiconductor stocks, with related shares in Japan and Taiwan also falling.

Ad

Investor Concerns Mount

The rout in chip stocks comes despite SK Hynix posting record quarterly earnings. The strong results failed to reassure investors, who are increasingly worried about lofty valuations and whether the massive capital spending required for AI infrastructure can be sustained. Sentiment has been further dented by reports that major players are seeking financing for vast data center projects and by signs of growing competition from Chinese rivals like ChangXin Memory Technologies (CXMT).

Despite the recent downturn, analysts noted that the KOSPI remains significantly above its levels from a year ago, following a powerful rally fueled by AI enthusiasm. Investors are now looking to the U.S. Federal Reserve's upcoming policy decision and earnings reports from Microsoft and Meta Platforms for further direction on global technology shares and overall risk appetite.