South Korea’s KOSPI tumbles over 6%, extending global tech selloff – Firstpost

South Korea’s benchmark stock index KOSPI plunged more than 6 per cent, extending a global technology-led market selloff that has rattled investors from Wall Street to Asia amid fears of prolonged high US interest rates and escalating geopolitical tensions in West Asia.

The KOSPI was down 494.48 points, or 6.11 per cent, at 7,602.45 by 10:11, after suffering even steeper losses earlier in the session. The sharp decline follows a rout in global technology stocks that has wiped billions of dollars off market valuations over the past few days.

The fall marks one of the biggest single-day declines for South Korean equities in recent years and underscores growing concerns that the artificial intelligence-fuelled rally that powered markets higher through much of the past year may be losing momentum.

Tech and chip stocks lead losses

South Korea’s stock market is heavily weighted toward technology and semiconductor companies, making it particularly vulnerable to shifts in global investor sentiment toward the sector.

Investors rushed to sell technology shares after a sharp downturn on Wall Street, where the Nasdaq Composite suffered one of its worst sessions in months. Semiconductor stocks, which have been among the biggest beneficiaries of the AI boom, were hit especially hard as traders reassessed lofty valuations and reduced exposure to riskier assets.

The technology sector has driven much of South Korea’s recent market gains, fuelled by expectations of sustained demand for AI-related chips, data centres and advanced computing infrastructure. However, analysts say those expectations are now being tested by a changing interest-rate environment and growing economic uncertainty.

AI rally faces reality check

The latest decline represents a significant setback for South Korean equities, which had emerged as one of the strongest performers among major global markets thanks to enthusiasm surrounding artificial intelligence and semiconductor exports.

The country’s stock market recently reached record levels as investors poured money into chipmakers expected to benefit from surging AI demand. South Korea had also climbed the ranks of global equity markets by market capitalisation amid the technology boom.

However, market strategists warn that stocks tied to AI and semiconductor themes had become increasingly expensive, leaving them vulnerable to sharp corrections whenever economic or policy risks emerge.

West Asia tensions add pressure

Adding to investor anxiety are rising geopolitical tensions in West Asia.

Oil prices have climbed sharply after renewed military confrontations in the region raised concerns about potential disruptions to energy supplies.

For South Korea, which imports most of its energy needs, sustained increases in oil prices could squeeze corporate profits, raise production costs and weaken consumer spending.

The combination of higher energy prices, persistent inflation risks and uncertainty over interest rates has created a challenging backdrop for global financial markets.