KOSPI Trading Paused as Global Tech Stocks Tumble
South Korea’s stock exchange just suffered its largest weekly decline. The KOSPI index fell 10.84% Tuesday. This compelled the trading to be stopped for the eighth time this year.
Both opened and closed at 6,023.67 points. This fell 732.09 points in one day. That lost some $360 billion in market value, or a bit more than half a trillion Korean won.
KOSPI has shed over 28% in the past month. It’s a sharp drop for Asia’s second-largest stock exchange.
Chip Stocks Lead the Slide
Semiconductor stocks fueled the drop. These chip companies make up much of Korea’s economy. Ripples have been felt in Korea and investors have been withdrawing funds from AI and chip shares globally.
Much of that pressure was from China. Changxin Memory Technology, or CXMT, just completed a big IPO. This ended fears of fierce competition in the memory chip industry.
The chip giants in the United States fared poorly too. Nvidia shares fell 4.4%. It was a brutal drop for Micron and SanDisk. The nosedive to gloom reverberated through Asian markets.
Samsung and SK Hynix Take the Hit
Samsung Electronics felt the effects the most. That’s roughly half of the value of the KOSPI, so when Samsung tanked, the KOSPI sank with it.
SK Hynix was no exception. It has dropped almost 50% since hitting a high in June.
AI Spending Under the Microscope
The worry is not just Korea. Investors everywhere are demanding some hard questions about investing in AI.
AI data centers are a massive investment for companies. Some of it is money borrowed, and people are beginning to wonder whether all this spending can be maintained.
Japan’s Nikkei 225 also dropped sharply, showing this is not a Korea only problem.
There’s another danger. A few investors took out loans. This may lead to forced sales as prices continue to decline, putting further strain on an already precarious market.
What Comes Next
But for now, Samsung and SK Hynix are the focus. Whether it’s a blip or the beginning of something more may depend on the role these two juggernauts play in the next few months.
