South Korea's Kospi suffers 8% crash as tech giants come under pressure

South Korea's benchmark Kospi index dropped more than 8%, ending at 7,392.04 after a broad sell-off in technology stocks.

In Short

• South Korea's Kospi index fell over 8% due to tech stock sell-off
• Samsung Electronics and SK Hynix shares dropped around 9% each
• Tech weakness spread across Asian markets including Japan and China

After months of strong gains driven by excitement around artificial intelligence (AI), investors are becoming more cautious. That shift was clearly visible on Tuesday, when South Korea's stock market suffered a sharp fall as technology shares came under heavy selling pressure.

The sell-off spread across several Asian markets, with chipmakers leading the decline. Investors are increasingly questioning whether the huge spending on AI will deliver the profits that many companies are promising.

TECH ROUT SHAKES KOSPI

South Korea's benchmark Kospi index dropped more than 8%, ending at 7,392.04 after a broad sell-off in technology stocks.

The sharp fall was largely driven by losses in two of the country's biggest chipmakers — Samsung Electronics and SK Hynix. Investors continued to reduce their exposure to AI-related companies amid concerns that stock prices have risen too quickly.

The wider MSCI Asia Pacific Index also fell 1.7%, reflecting the cautious mood across the region.

SAMSUNG AND SK HYNIX LEAD THE LOSSES

Samsung Electronics fell 9.3%, even though the company recently reported a 19-fold jump in profits. The stock has already more than doubled this year, leading some investors to book profits after its strong rally.

SK Hynix declined 9.5% after beginning the marketing process for its planned US listing.

The weakness in both companies weighed heavily on the overall South Korean market, as they are among the country's largest listed firms.

The recent surge in AI-related shares has been fuelled by expectations of strong demand for AI chips, data centres and related technology.

However, many investors are now asking whether these high valuations can be justified. There are growing concerns that companies are spending billions on AI infrastructure without clear evidence that the investments will translate into higher productivity or long-term profits.

This uncertainty has made AI stocks more volatile in recent weeks.

Despite the recent market weakness, SK Hynix is moving ahead with plans for a Nasdaq listing in the United States.

The company is looking to raise about $28 billion through the share sale. The offering is expected to be closely watched by global investors, as it will provide an important test of market appetite for AI-related investments.

WEAKNESS SPREADS ACROSS ASIAN MARKETS

The cautious mood was not limited to South Korea.

Japan's Nikkei 225 fell 1.8%, with chip equipment maker Tokyo Electron losing 3.4%. Memory chipmaker Kioxia Holdings dropped 10.7%. Hong Kong's Hang Seng Index slipped 0.4%, while China's Shanghai Composite Index declined 1%. Taiwan's Taiex also lost 1.8%.

US technology futures also pointed lower, with Nasdaq 100 futures falling 1%, suggesting that Monday's rebound on Wall Street may not continue.

MARKETS REMAIN FOCUSED ON THE AI STORY

The recent pullback shows that investors are becoming more selective after months of strong gains in AI-linked stocks. While the long-term outlook for artificial intelligence remains positive, markets are now paying closer attention to company earnings, valuations and whether massive investments in AI can deliver the returns that investors expect.

For now, any signs of slowing growth or stretched valuations are likely to keep technology shares under pressure, both in Asia and across global markets.

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