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South Korean stock market at three-month low as AI sell-off intensifies

Samsung and SK Hynix fall by more than 10% amid renewed fears over AI spending and Chinese competition

The sell-off in AI stocks has intensified, driving South Korea’s stock market down to its lowest level in three months.

Investors continued to ditch chip stocks on Tuesday, amid rising concerns about the huge amount of borrowing among AI companies to fund their datacentre expansion plans.

The South Korean semiconductor companies SK Hynix and Samsung Electronics fell by more than 10%, dragging the country’s Kospi share index down by 11.5% to its lowest point since mid-April.

US chip stocks extended their recent losses when Wall Street opened on Tuesday, with Intel, Advanced Micro Devices, Sandisk, Western Digital Corp and Seagate Technology all down by more than 4%.

Chip stocks slide in US and Asia as AI jitters rattle investors

Shares in major chip firms have fallen sharply in the US and Asia as a sell-off in artificial intelligence-related stocks deepened.

Trading on South Korea's benchmark Kospi index was paused temporarily on Tuesday morning after sliding by 8%. It fell further after the 20-minute halt was lifted, closing 10.8% lower.

The slump was led by technology firms, with Samsung Electronics and SK Hynix both falling by more than 13%.

It comes after AI chip giant Nvidia fell by 5% in New York on Monday, meaning it lost its position as the world's most valuable listed company to Apple.

The tech-heavy Kospi has been halted multiple times so far this year under a stock market mechanism known as a circuit breaker, which is designed to calm panic selling.

KRX activates sell-side sidecar for KOSPI on sharp decline

Korea's bourse operator on Wednesday activated a sell-side sidecar for the benchmark Korea Composite Stock Price Index (KOSPI) after the index fell sharply, led by tech losses.

Program trading in KOSPI-listed shares was suspended for five minutes around 10:55 a.m., according to the Korea Exchange (KRX).

The decline came as retail investors sold off large-cap stocks, including SK hynix, as investors question whether massive spending on artificial intelligence (AI) will generate returns enough to justify elevated tech firms' valuations.

A sell-side sidecar is triggered when the KOSPI 200 Futures Index falls 5 percent or more for at least one minute.

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