Key takeaways
- The KOSPI plunged about 7%, triggering a temporary trading halt and extending its losing streak
- Investors are questioning high technology valuations and the returns from massive AI spending
- Heavy foreign selling and concerns over higher interest rates added to the pressure
South Korea’s KOSPI suffered another brutal selloff on Thursday due to mounting concerns over the artificial intelligence trade.
The benchmark index plunged about 7%, and reached its lowest level since late July. The decline was severe enough to trigger a circuit breaker that temporarily halted trading as volatility surged.
The drop also extended the KOSPI’s losing streak to seven consecutive sessions, its longest since September of 2024. Despite still being up around 30% in 2026, the index has now fallen roughly 39% from its record high reached in June.
KOSPI Hit by Heavy Foreign Selling
South Korea has been particularly vulnerable to the latest technology rout because of the enormous weighting of semiconductor companies in its stock market.
Samsung Electronics plunged 9%, while SK Hynix sank 11%. The losses followed a 4% decline in the Philadelphia Semiconductor Index in the previous US session. Foreign investors added to the pressure by dumping approximately 2.9 trillion won, or around $2.15 billion, worth of South Korean shares during the session.
The selloff has spread beyond chipmakers and investors are now reduced exposure to riskier assets. LG Energy Solution and Hyundai Motor were among the other major KOSPI companies caught in Thursday’s decline.
AI Boom Faces Growing Questions
The latest KOSPI drop forms part of a much bigger reassessment of the AI investment boom. Investors are becoming concerned about whether the enormous sums being spent on AI data centers, chips and computing infrastructure will generate sufficient returns.
Those concerns have been compounded by hotter-than-expected US inflation, which increased expectations that interest rates could remain elevated or even rise further. Higher rates are particularly damaging for richly valued technology stocks because they reduce the present value of expected future earnings.
Competition is another concern. Chinese memory-chip manufacturer CXMT has reportedly been narrowing the technological gap with established producers, which raises questions about future pricing power for companies like Samsung and SK Hynix.
For the KOSPI, the result has been an unusually sharp reversal. South Korea was one of the strongest-performing equity markets during the AI boom, but its heavy dependence on semiconductor stocks is now amplifying the downside as investors reassess the sector.
Whether the KOSPI can stabilize may therefore depend heavily on fresh confidence in AI spending, semiconductor demand and the outlook for global interest rates.
