Global Market: Kospi slides after early surge as AI stocks face valuation pressure

South Korean equities gave up early gains on Monday as investors turned cautious over elevated valuations in artificial intelligence-linked stocks, while lower crude oil prices provided support to broader emerging Asian markets, according to Reuters.

The tech-heavy Kospi index, which had climbed more than 2% earlier in the trading session, reversed course to fall over 2% as investors reassessed the sharp rally in AI-related stocks. The decline weighed on the broader MSCI Emerging Markets Asia Index, which slipped 0.1%, with South Korea accounting for more than a quarter of the benchmark.

AI rally faces valuation test

According to Reuters, the reversal in South Korean stocks reflected growing investor caution at the beginning of the second half of the year. While geopolitical concerns linked to the Middle East have eased somewhat, market participants are increasingly questioning whether enthusiasm surrounding artificial intelligence can continue to justify lofty equity valuations.

The renewed scrutiny comes after AI-related stocks have led global market gains over the past year, leaving investors more sensitive to valuation risks and profit booking.

SK Hynix in focus ahead of major US listing

Investor attention also remained on South Korea's semiconductor sector, with Reuters reporting that chipmaker SK Hynix is set to launch a U.S. listing expected to raise around $28 billion, making it one of the world's largest share offerings. The company's shares declined 4% during Monday's session.


The listing underscores continued investor interest in AI infrastructure and advanced memory chips, although recent market volatility suggests investors are becoming more selective.

Currency reforms continue despite weaker won

South Korea also introduced a 24-hour onshore spot dollar-won trading system on Monday, a significant milestone in its efforts to improve currency market accessibility and strengthen its case for inclusion in MSCI's developed-market index, Reuters reported.

Despite the reform, the South Korean won weakened 0.2% against the U.S. dollar during the session.

Earnings season expected to reinforce AI momentum

Markets are now shifting their focus to the upcoming corporate earnings season, where technology companies are expected to continue benefiting from robust AI-driven demand.

According to Reuters, Samsung Electronics is expected to report an approximately 18-fold increase in second-quarter operating profit compared with a year earlier when it releases preliminary earnings estimates on Tuesday. Strong semiconductor demand linked to AI applications is expected to remain a key earnings driver.

Lower oil prices lift broader emerging Asia

Elsewhere in the region, emerging Asian equities received support from softer crude oil prices, which are generally beneficial for the region's largely oil-importing economies.

Philippine equities climbed 1.9%, led by gains in Ayala Corp and Bank of the Philippine Islands, whose shares rose 4.3% and 3.7%, respectively.

Singapore's Straits Times Index briefly touched a record high of 5,253.99 points before surrendering most of its gains to trade near its previous close.

OPEC+ output increase eases inflation concerns

According to Reuters, crude oil prices edged lower after OPEC+ agreed to raise production targets by 188,000 barrels per day from August, extending similar output increases implemented in June and July.

Lower energy prices are expected to ease inflationary pressures across emerging Asia, improve trade balances for oil-importing economies and provide a supportive backdrop for regional financial assets.

Regional currencies remain under pressure

Despite improved sentiment in equity markets, Asian currencies continued to face pressure against the U.S. dollar.

The Indonesian rupiah hovered near the 18,000-per-dollar level, while the Taiwan dollar weakened 0.4%. The Thai baht and Malaysian ringgit each declined 0.2%, reflecting continued demand for the U.S. currency amid cautious global market sentiment.