Korean Stocks Extend Drop From Peak to 20% as AI Jitters Spread

South Korea's Kospi index fell as much as 5.7%, bringing its decline from last month's all-time high to about 20%, as investors reassessed the outlook for artificial intelligence demand. Memory maker SK Hynix slid 5% and Samsung Electronics fell 6.9%, highlighting the market's vulnerability due to its reliance on chipmakers. The selloff reflects growing uncertainty about the sustainability of AI-driven semiconductor spending.

Bloomberg -- South Korea's equity market extended declines, pushing the benchmark gauge toward a technical bear market as investors reassessed the outlook for artificial intelligence demand. Most Read from Bloomberg - Greece Offers Bounty to Catch Ravenous Fish Lured by Warming Sea https://www.bloomberg.com/news/articles/2026-07-05/greece-offers-bounty-to-catch-ravenous-fish-lured-by-warming-sea?utm campaign=bn&utm medium=distro&utm source=yahooUS - Chip Stocks Sink After Blistering Run as Oil Jumps: Markets Wrap https://www.bloomberg.com/news/articles/2026-07-06/stock-market-today-dow-s-p-live-updates?utm campaign=bn&utm medium=distro&utm source=yahooUS - Two Millennium Trading Pods Made About $3.7 Billion Last Month https://www.bloomberg.com/news/articles/2026-07-06/two-millennium-trading-pods-made-about-3-7-billion-last-month?utm campaign=bn&utm medium=distro&utm source=yahooUS - US Strikes Iran and Blocks Oil Sales in New Test of Ceasefire https://www.bloomberg.com/news/articles/2026-07-07/us-revokes-waiver-allowing-iran-oil-sales-after-tanker-attacks?utm campaign=bn&utm medium=distro&utm source=yahooUS - China Sentences Official to Death Over $325 Million in Bribes https://www.bloomberg.com/news/articles/2026-07-06/china-sentences-official-to-death-over-325-million-in-bribes?utm campaign=bn&utm medium=distro&utm source=yahooUS The Kospi dropped as much as 5.7%, taking its drop from last month's all-time high to about 20%. Memory maker SK Hynix Inc. slid as much as 5%, while Samsung Electronics Co. fell 6.9%. Korea has been the world's best‑performing equity market this year, but its outsized reliance on two chipmakers has left it especially vulnerable when sentiment around the sector turns. Leveraged exchange‑traded funds, which magnify moves in both directions, have added to the market's volatility. Chip stocks continued to fall despite Samsung Electronics' 19-fold surge in quarterly profit released earlier this week, underscoring how traders are demanding more to justify sky-high investments across the supply chain. "A lot of this increase in volatility is driven by fundamental uncertainty," said Ian Samson, a portfolio manager at Fidelity International. "We are seeing real, huge demand for all kinds of semiconductors driven by AI - but this is really just being driven by around $1 trillion of capex controlled by a handful of huge tech companies," which creates downside risk if this chip spending proves unsustainable, he added. Over the past few weeks, the Kospi has swung sharply as investors parsed every AI industry development to test the rally's durability. The Kospi was up about 116% this year through its peak, but has now pared that advance to about 73%. It's still the world's best performing benchmark. Most Read from Bloomberg Businessweek - At 17, She Sued Meta and Google, and Won. Now She's Ready to Tell Her Story https://www.bloomberg.com/news/features/2026-07-03/google-and-meta-lost-a-landmark-trial-to-kaley-but-kept-her-as-a-user?utm campaign=bw&utm medium=distro&utm source=yahooUS - 'Southern Squeeze' Grips US Cities Once Known for Affordability https://www.bloomberg.com/news/features/2026-06-29/high-gas-prices-and-home-prices-make-atlanta-nashville-less-affordable?utm campaign=bw&utm medium=distro&utm source=yahooUS - Dan Carlin Believes That American History Rhymes, Not Repeats https://www.bloomberg.com/news/articles/2026-07-06/dan-carlin-believes-that-american-history-rhymes-not-repeats?utm campaign=bw&utm medium=distro&utm source=yahooUS ©2026 Bloomberg L.P.