South Korea’s KOSPI sinks 17% in October as AI doubts hammer chipmakers

South Korea’s KOSPI index fell 17.11% between October 1 and October 16, the steepest decline among major global stock indexes, as investor doubts over the payoff from AI spending hit the country’s chipmakers, Seoul Economic Daily reported, citing Korea Exchange data.

The rout peaked on October 15, when the KOSPI plunged 7.57% to close at 5,554.22, erasing nearly 400 trillion won, or about $298 billion, in market value, The Korea Times reported. Samsung Electronics dropped 9.48% and SK Hynix fell 11.06%. A Level 1 circuit breaker halted trading that afternoon.

The index is now down about 40% from its June 19 peak of 9,385, making South Korea a bellwether for growing investor skepticism about AI, Bloomberg noted on October 20.

Foreign investors extend selling streak

Foreign investors sold 3.6 trillion won of shares on October 15, their eighth straight session of net selling, while institutional and retail investors were net buyers. The selloff followed hotter-than-expected US inflation data, a rise in the 10-year Treasury yield above 5.3% and a 15% drop in CoreWeave shares, alongside concerns about slowing revenue growth at AI developers.

Financial authorities said the decline appeared excessive given its pace and trading flows. The KOSPI’s year-to-date gain has narrowed to 34.5%. The weak sentiment carried into the October 20 Kosdaq debut of AI infrastructure firm Elice, whose shares fell 32% despite heavy IPO demand.