South Korea's Kospi Plunges Amid Chip Stock Selloff Driven by AI Concerns
South Korea's benchmark index suffered its steepest drop since March due to heavy selling in semiconductor stocks, while Indian markets remained flat amid regional economic assessments.
South Korea's Kospi index plunged nearly 11% on Tuesday, its biggest fall since early March, as heavy selling of chipmaking stocks drove the decline. The drop reflects a broader tech rout across Asian markets sparked by growing anxiety over artificial intelligence investments.
South Korea's Kospi index plunged nearly 11% on Tuesday, marking its steepest single-day decline since early March, as a wave of selling in semiconductor shares rippled across Asian markets. The benchmark closed 10.8% lower at 6,023.66, with trading temporarily halted at points during the session as the index fell to its lowest level since April (AP India).
The rout was concentrated in the heavyweight chipmakers that have led the region's artificial intelligence rally. Shares of Samsung Electronics sank 13.4%, while SK Hynix tumbled 14.7% in Seoul. The selling pressure followed SK Hynix's U.S.-traded shares closing below their $149 initial public offering price on Monday, ending at $143 a share (AP India). The decline extended to Taiwan, where the Taiex skidded 4.7% and Taiwan Semiconductor Manufacturing Co. shares fell 3%, while Tokyo's Nikkei 225 dropped 4% (AP India).
Analysts attributed the sell-off to mounting anxiety that the AI investment boom may be forming a bubble, intensified by signs of accelerating Chinese competition. A report in The Information stating that China has begun mass production of homegrown deep ultraviolet chipmaking tools spooked investors concerned about the competitive position of global semiconductor leaders. "We believe the market was likely spooked by the progress of China's chipmaking equipment capabilities," said Jing Jie Yu, an equity analyst at Morningstar, though he added the reaction appeared "largely a knee-jerk reaction and overdone" (AP India). The concerns were underscored by the debut of Chinese memory chipmaker CXMT in Shanghai, which surged 466% on Monday to become China's most valuable listed company with a market capitalization near $490 billion, before dropping 4% on Tuesday (AP India).
The technology sell-off contrasted with relative stability elsewhere in the region. Hong Kong's Hang Seng gained 0.3%, while Australia's S&P/ASX 200 rose 0.6%. In India, the Sensex edged 0.1% higher as investors assessed a pause in U.S.-Iran hostilities that has eased oil prices (AP India, Reuters India). Brent crude fell 2.1% to $84.07 a barrel after mediators reported progress in restarting negotiations between the two sides (AP India).
On the corporate earnings front, Hindustan Unilever Ltd. reported a decline in quarterly profit as higher commodity costs squeezed margins, sending its shares lower (Reuters India, Google News India). Meanwhile, Coal India missed profit estimates on weak volumes and higher costs (Reuters India), while TTK Prestige saw quarterly profit more than double as consumers shifted toward induction cooktops (Google News India). Wall Street ended mixed on Monday, with the S&P 500 rising less than 0.1% and the Nasdaq falling 0.2% for a fourth straight loss, as Nvidia dropped 5% and Micron Technology slumped 2.3% (AP India, Reuters India).
AP India·Reuters India