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South Korea’s KOSPI fell 7.57 per cent to a six-month closing low as Samsung Electronics and SK Hynix plunged. Sticky US inflation revived rate-hike fears, while investors questioned whether massive AI investments can deliver sustainable returns
South Korea’s benchmark KOSPI index plunged 7.57 per cent on Thursday to close at 5,554.22, its lowest closing level since April 7, as a selloff in semiconductor stocks exposed growing doubts about the returns from massive artificial intelligence investments. Persistent US inflation added to the pressure by reviving concerns over further interest rate hikes, raising the cost of financing AI infrastructure and weighing on technology stocks.
The index fell 454.59 points during the session, extending its losing streak to seven consecutive trading days. It dropped as much as 9.29 per cent before recovering some losses. The selloff triggered a circuit breaker that halted trading for 20 minutes, the first such suspension on the KOSPI since July 29.
Samsung Electronics fell 9.5 per cent, while SK Hynix plunged 11.1 per cent. The Philadelphia Semiconductor Index had fallen 4.3 per cent overnight, adding to the pressure on South Korean chipmakers.
US inflation revives rate-hike fears
US consumer price inflation rose 3.7 per cent year on year in September, exceeding market expectations of 3.6 per cent, according to market reports. The data reinforced concerns that inflation could remain elevated and limit the Federal Reserve’s ability to ease monetary policy. Investors also increased their bets on further rate hikes.
More from BusinessHigher interest rates can weigh on technology stocks by increasing borrowing costs and reducing the present value of expected future earnings. The effect is particularly important for AI infrastructure, which requires substantial investment in data centres, computing capacity and advanced semiconductors.
If financing becomes more expensive, companies may face greater pressure to justify their spending plans. Investors could also become less willing to pay high valuations for businesses whose expected profits depend on continued growth in AI demand.
The inflation data added to selling pressure after US semiconductor stocks fell sharply overnight. The resulting decline in South Korea hit a market heavily exposed to chipmakers and other companies linked to the global technology investment cycle.
Samsung, SK Hynix lead the selloff
Samsung Electronics and SK Hynix were among the biggest drags on the KOSPI on Thursday. Samsung shares fell 9.5 per cent, while SK Hynix lost 11.1 per cent.
The weakness spread across the wider market. Battery maker LG Energy Solution declined 4.6 per cent, while Hyundai Motor fell 5.7 per cent. Of the 917 stocks traded, 789 declined and 113 advanced.
Foreign investors were net sellers of South Korean shares worth 3.6 trillion won, or about $2.68 billion, adding to the selling pressure.
What the crash means for markets
South Korean financial authorities held an emergency meeting to review market conditions and pledged to respond proactively to maintain stability and protect investors.
The KOSPI’s seven-session losing streak and Thursday’s trading halt highlight how quickly concerns about US monetary policy and AI spending can affect markets exposed to semiconductor stocks.
(With inputs from agencies.)
